Observations on the world today.

Monday, October 24, 2005

Monday Morning Idiots; Part Deux 

Again from Morons for Bush:
What Media Bias? XXXII
Every now and again the MSM will just go out and prove how ignorant they are. This AP headline is a perfect example of this:
In Market Paradox, Gasoline Retailers Do Best When Pump Prices Fall
Uh, no. You see, MSM, what happens is that when prices fall for a good or service, more people use that good or service...so even though you're charging less per unit, you're selling vastly more units and thus making more money. This is called Econ 101. You might want to look it up.
Uh, no, rightwing idiot, this is not always the case. And you miss the entire point of the headline, and you're wrong to even accuse the MSM here. But first points first.

This wingnut starts off claiming that lowering prices is always the best way to sell more product and increase profit and that this is a free-market truism. Although it obviously is not. When you hold the monopoly on a good or service, profits can be maximized by charging the maximum that the market will bear. People often think this is the case with gasoline, but they are wrong, and that is the basic falacy with gas priceing that this story addresses. Which brings us to point number two. Here is the opening of the article in question:
Motorists may appreciate the recent decline in fuel prices, but not as much as gas station owners do.

When pump prices skyrocketed after Hurricane Katrina, gasoline retailers were caught in an uncomfortable paradox - they were accused of gouging at the same time their profits were being squeezed by runaway costs at the wholesale level.
So we see that the headline was perfectly fair and accurate. The paradox is that in the fuel retail market, people think "price gouging" when prices rise, and as a result they buy less fuel actually hurting the retailer's profits.

Finally the last point, that it was wrong to blame the MSM for this headline (not that there is any blame to be had anyway.) This was an AP story that ran on several sites. Each wrote their own headline. For example, the Houston Chronicle ran this headline: Gasoline retailers do best when pump prices fall. And ABC News ran this headline: Retailers Appreciate Dip in Gas Prices; In a Paradox of the Gasoline Market, Retailers Are Appreciating Recent Dip in Prices. The problem was never with the MSM. It was with the reading comprehension difficulties of the moron at Blogs for Bush.
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