What do I know about economics?

[Cool Texan]

Here I thought I was a smart guy...I didnt realize that with Supply/Demand, if Demand goes down your prices will go.... wait for it.... up?? Seems that in CT if you do your part, and conserve natural gas, your reward will be higher rates!?!?!? Maybe Oregon's not so backwards after all...

http://www.connpost.com/news/ci_3297184

[24 on/ 48 off]

As my ex GF used to say: "WHAT-ever!"

--spud--

When dealing with a monopoly or semi monopoly those that have the supply can demand the price.

[finclipped]

In some respects I can agree with what they are saying, but effects on the balance sheet are the true "reason."

Margins on gas and oil are relatively stable, but when the price of the products double's, you still need to buy the product before it is sold. You need to make up that price difference with either borrowing more money or contributing more equity to buy inventory. If you buy more gas reserves or have to pay more for those reserves, you must borrow more money and pay more interest. It also, gets banks (ie creditors) nervous when they see a huge increase in liabilities and a correponding increase in leverage.

The point about the uncollectible bills, may also be to blame, as when the cost of a gallon of oil doubles, so to will the likelyhood that losses will double. The rate of uncollectibles is relatively stable, but if the cost of the oil is double, you have just doubled your losses.

Conservation, self imposed or not, leads to lower volume and requires an increase in margins or a decrease in overhead to maintain profitability. They chose to increase margins.

[StickFish]

Friend of mine is a utilities attorney usually deals with telecom stuff. Anyhow the price of natural gas is tied by the therm to the cost of heating oil by the therm - heating oil is going up so will Natural Gas

[mandinga]

Here I thought I was a smart guy...I didnt realize that with Supply/Demand, if Demand goes down your prices will go.... wait for it.... up??

You must have been sleeping during macro econ 101...lol.

But that doesnt mean that you aren't a smart guy.

[skybuster]

I have owned 2 businesses in the last 10 years. The most recent business I took over about a year ago. The business had seen its revenue decline by more than half in the previous few years before I got it.

Demand for our services had declined, and I think the previous owner assumed that the business would not rebound.

The first thing I did upon taking over was to raise prices by almost 20 percent. It works. Business is up over 30 percent from a year ago and may go higher than that by the end of the year. I am in Seattle training new employees and trying to stay caught up on jobs right now. Of course, you have to do the job right as well, but if you provide the results you can demand the price.

You won't ever know how much money someone will pay until you ask!

[Cool Texan]

Lest anyone get confused, this post is completely sarcastic about the poor folks of CT getting the screw-job.