Fuel Price Speculation Amidst the Iran Conflict
Prompt
The current military conflict in Iran is the origin of unfounded accusations lacking economic logic. For example, fuel distributors are accused of speculating, in a pejorative sense, because they raise the price of fuel purchased at lower prices at an earlier time before the military conflict. The error in this argument is to believe that past costs determine present prices. Human action is always prospective, and the price rises because there are expectations of scarcity. The distributor does not think about what it cost him to buy the liter of gasoline but about what it will cost him to replenish it. Selling current fuel at the old price would be an act of business irresponsibility that would lead him to bankruptcy. Meanwhile, domestic consumers and businesses are driven to economize fuel before the situation worsens. Paradoxically, the criticized speculation on gasoline prices is a market reaction that benefits everyone.
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