Should companies just make everything cost less to compensate for high oil prices?

Question

This is just for fun and I'm not talking about now, but when gas is around $15-20+ a gallon...

If everyone starts paying less for everything things might improve Supply and demand would rise because people would be buying stuff they couldn't normally afford with gas prices and a crappy economy. If there were some brands that wouldn't lower prices, no one would buy them and they'd have to follow or fail. Eventually we wouldn't need to drive at all because things would be less stressful and oil prices would go down, then once they did, we could do it all over again.

Give me some non-obvious reasons that wouldn't work. Is this technically socialism, or the natural logical progression of an economy if gas gets too expensive, or both?

Answer 1

You can't produce products if people pay less than the price required to return a normal profit.  If you did, nobody would invest in the company and there would be no money to buy materials and pay for the labor and equipment.  So to have this work, you would have to have prices for the factors of production go down at the same time.   Wages would be cut, suppliers would reduce prices for raw materials, etc.   If you do that, you won't really accomplish anything, since its just changing the enumeration of the expenses, not their real value.  If everyone cuts prices by half, then you would pay a half dollar tomorrow for what is worth a dollar today.  but you would only get paid a half dollar tomorrow, for work that is worth a dollar today, so you are no better or worse off.

Answer 2

If supply and demand BOTH rise, prices increase.

Answer 3

1.  oil prices won't go down, the oil is running out.

2.  if companies don't INCREASE their prices to cover the cost of fuel, they go broke, simple, then unemployment becomes huge..

Competition already FORCES companies to sell as cheap as possible. If they go even further, bye bye company.  Hello lawsuits and mismanagement claims.

Do you lower what you charge friends for gas money when the cost is going up?

As the saying goes "If your income doesn't meet your outgoing, your upkeep will be your downfall".  

You always have to have more money comingin than going out whether you are a person or a company.  If you're unclear on this, you'll learn the hard way what happens.

Answer 4

NO, What a cataclysmic idea. That would put all the companies out of business as the higher the gas prices the more it cost them to operate. So doing that would give them a negative budget. The way you compensate is by screaming at your legislation and stopping governments from subsidizing oil companies and start taxing the shat out of them.