Quote:
Originally Posted by chemgear
Naw, like the carbon taxes, the additional cost of (minimum) wage increases, the higher business taxes, the increased property taxes - business will just absorb it. They cannot possibly pass the costs on down the chain to their customers (and ultimately the general public).
That's inconceivable!  |
Demand sets the price here.
The maximum price that can be charged is the cost of the alternative option. Kinder Morgan is not going to discount their rate because they found a more efficiemt way to operate.
Rail costs $x per barrel to ship oil. KinderMorgans costs will be slightly more attractive than rail so they can fill up the line with long term contracts. KinderMorgans costs have little to do with the price they charge in a market where demand exceeds supply.
The bigger risk is that this billion dollar decision effects the IRR of the project causing it not to get sanctioned by KM.
The only way an agreement like this would cause prices to go up would be if all Competitors were subject to the same agreement as in a competitive market the lowest price of the most efficient company sets the price.
