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Old 01-31-2014, 11:20 AM
 
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I just read an article in a central MN paper that a big turkey operation in Minnesota goes thru 30,000 gallons of propane in a week.

Since the propane price jumped over $3 a gallon recently, that is a $90,000 a week increase in expense.

Since the profit margin on poultry operations is narrow, look for poultry prices at the supermarket to rise or huge poultry barns sit empty.

that would cause poultry prices to rise, also.
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Old 01-31-2014, 12:06 PM
 
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I would like someone to explain to me why prices rise when quantities are scarce, beyond simple greed. If turkey prices go up because the cost to produce turkey goes up due to increased propane costs, I understand that. But I do not, and have not ever, understood why the price of something increases simply because there is less of it, except for people using that opportunity to make money per unit.
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Old 01-31-2014, 02:01 PM
 
Location: Idaho
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Interesting question, Teddy.

Things are linked far more than we realize.

'Something is not right': Lawmakers press for probe of soaring propane prices | Fox News
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Old 01-31-2014, 02:16 PM
 
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Quote:
Originally Posted by vmaxnc View Post
I would like someone to explain to me why prices rise when quantities are scarce, beyond simple greed. If turkey prices go up because the cost to produce turkey goes up due to increased propane costs, I understand that. But I do not, and have not ever, understood why the price of something increases simply because there is less of it, except for people using that opportunity to make money per unit.
Really? That is pretty simple economics. A Google search and five minutes of your time and you'd have the answer. And the answer has nothing to do with greed.
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Old 01-31-2014, 08:13 PM
 
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Originally Posted by TaxPhd View Post
Really? That is pretty simple economics. A Google search and five minutes of your time and you'd have the answer. And the answer has nothing to do with greed.
I have searched, and spoken with numerous people. Not a single person has given me a reason that isn't based on artificial concepts. Some people simply accept that it is "simple economics" but I do not.
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Old 01-31-2014, 09:25 PM
 
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Originally Posted by vmaxnc View Post
I have searched, and spoken with numerous people. Not a single person has given me a reason that isn't based on artificial concepts. Some people simply accept that it is "simple economics" but I do not.

supply and demand is what determines livestock/meat prices.

Been that way as long as I can remember.
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Old 02-01-2014, 07:17 AM
 
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Originally Posted by vmaxnc View Post
I have searched, and spoken with numerous people. Not a single person has given me a reason that isn't based on artificial concepts. Some people simply accept that it is "simple economics" but I do not.
I'm not sure what you mean by "artificial concepts" but the concepts of supply and demand are as real as gravity. There is nothing "artificial" about them.

Take a look at this graph:



The shortage causes a change in supply, and the supply curve shifts to the left, from Supply 1 to Supply 2. When that happens, the equilibrium point shifts as well, and the market establishes equilibrium at the new, higher, price.

And as I said before, greed has nothing to do with it.
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Old 02-01-2014, 07:37 AM
 
Location: MMU->ABE->ATL->ASH
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The rise on propane prices will have no effect in the short / Medium term.

Companies buying that much propane are not buying it on the retail level, They are getting on the wholesale, and buying propane futures to protect themselves on the upside of the price.

PNY00 | Commodity Futures Price Chart for Propane Cash

Most of them would be buying the propane back last summer when it was .80/Gal
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Old 02-01-2014, 07:56 AM
 
Location: Jamestown, NY
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Quote:
Originally Posted by flyonpa View Post
The rise on propane prices will have no effect in the short / Medium term.

Companies buying that much propane are not buying it on the retail level, They are getting on the wholesale, and buying propane futures to protect themselves on the upside of the price.

PNY00 | Commodity Futures Price Chart for Propane Cash

Most of them would be buying the propane back last summer when it was .80/Gal
Exactly. Moreover, many individuals who heat with propane have contracts that provide for automatic delivery at an agreed upon price (many people who heat with oil have similar contracts) or install large tanks that they only fill once a year.

The people who are hurt by the price spike are those who don't have contracts and/or don't have large tanks (or didn't fill them). People who have large homes, older and poorly insulated ones, or who keep their thermostats high will likely suffer the most.
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Old 02-01-2014, 07:50 PM
 
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Quote:
Originally Posted by TaxPhd View Post
I'm not sure what you mean by "artificial concepts" but the concepts of supply and demand are as real as gravity. There is nothing "artificial" about them.

Take a look at this graph:



The shortage causes a change in supply, and the supply curve shifts to the left, from Supply 1 to Supply 2. When that happens, the equilibrium point shifts as well, and the market establishes equilibrium at the new, higher, price.

And as I said before, greed has nothing to do with it.
"The market establishes equilibrium" means nothing more than people charge more for their products whether those products cost more to produce or not, until they reach the highest amount those products continue to sell for. All that graph shows is what has happened. It does nothing to explain how it actually happens.

Show all the graphs you want but this is nothing more than people raising the price because they can. If sellers didn't change the price of their products, regardless of how many they have, they would not go up on their own. Artificial.
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