Not necessarily. I pay only $1 a day for water, but if you stop giving me water for 7 days the damages are going to be a lot more than $7. That doesn't mean it's reasonable to charge me more than $1 per day for water.
Obviously an extreme example, but the situation with this ship is likely similar. The damages probably far exceed the $15m/day in revenue (though I suspect they are far lower than $7b per day).
The reason water is cheap is because it's plentiful; there's a lot of competition to supply it. But there's only one Suez canal and sailing around Africa is much worse. So you would expect Egypt to be extracting a significant portion of the value the Suez canal adds.
You're forgetting about the stick, namely, the literally armies backing these massive shipping companies.
If you're going to run an extortion racket, you need the power to secure yourself against the inevitable challenges to your station. Egypt is in no position to handle and armed threat from the US, China, or even most European nations. Their government would be toppled and a sympathetic one would be installed who would lower shipping prices to something on the cheap side of fair.
The Suez Crisis's failure by the British and French had nothing to do with Egypt beating them militarily, and had everything to do with American pressure. One of the West's biggest strategic failures.
The Israel, British, and French insurrection completely dominated the Egyptians. The US wanted to carry favors with Egypt to prevent them to falling into the communist sphere, so it applied a pressure campaign against the British and French that completely wrecked the European economies (and from which they never really recovered). It didn't work, Egypt did not become an American ally in any meaningful way, and instead the West lost control over one of the most important shipping lanes in the world, turning it into a corrupt mess where you have to pay for passage in cigarette boxes and bribes.
It was one of the biggest foreign policy fuck-ups of the USA, in my opinion.
1. We're not talking about what's reasonable, but what's expected.
2. This isn't like a monopoly on water supply, because the ships don't have to go this way. To make the analogy work you'd have to add something like "everybody already has a well, but supplying tap water is cheaper than using a well". In such a situation, a water company that's maximizing profits would charge just a little bit less than using a well, and while it would annoy people it wouldn't harm them.
3. The government stops water companies from gouging for the good of the citizens, which isn't a factor here.
We could argue about how fitting it is, but I'll just say this:
If we want to go with "everyone has suitable access to rainwater for important household use", then it changes the impact of the water company overcharging. It goes from despicable to mundane.
The subject was predicting the cost of the boat getting stuck by comparing to the known cost to Egypt. The moral aspects of the water situation don't transfer across the analogy unless you also think that Egypt are charging less than they could because they think they have a moral obligation to shipping companies.
The houses just 100 yards away from me have wells for water. There is a large upfront cost of making the well but after that you have "free" water other than the electricity for the pump.
Yes, but you said it yourself, the value the Suez canal adds, compared to going the long way. It's much smaller than the value of being able to ship from A to B at all.
There is no major city with two independant water supplies, with their own sets of pips, purification systems and suers. Thays what water supply means. So no, there is no competition, and a supermarket water bottle is not competition.
> That doesn't mean it's reasonable to charge me more than $1 per day for water.
This is where someone steps in and says something to the tune of "Whatever price you're willing to pay is by definition reasonable" and completely ignore the ethical/moral issues with essentially holding someone's life for ransom by charging the maximum price they can get for something they need to survive.
The suez is the site of massive imperial intervention. The Suez crisis was precipitated when Egypt nationalized the canal. Western militaries and economic leverage are deployed to keep the prices low for the benefit of those governments.
It's a huge mistake to regard any international trade in the middle east as regulated by simple supply and demand curves. This is a site of world geostrategic focus, usually at the expense of the people that live there.
It's not 100% negative - clever Egyptian governments have managed to charge an extra "price" in diplomatic and geopolitical advantage. e.g. using selective closures as a weapon, selective opening to military traffic as an incentive. You just have to be careful not to take actions that affects everyone, like a massive and "unreasonable" price hike; these invite the kind of great-power consensus against you that is very dangerous.
(Interestingly, both have been practiced towards Israel at different times, as the countries have gone from bitter enemies to cautiously aligned against both Iran and Sunni Islamism of the Brotherhood/Hamas flavor.)
Someone else in one of these canal threads said that Egypt charges slightly less than it would cost to sail around Africa. If that's true, that Egypt is probably capturing around as much value as is possible from the canal.
That example was pretty idealized, starting and ending very close to the canal. Most voyages are probably not affected quite as starkly by the canal, and I doubt the canal can or does charge ships based on their overall itinerary.
> I doubt the canal can or does charge ships based on their overall itinerary
You'd be wrong there! They actually have a rebate system[0] based on a number of factors including origin and destination. Basically, they try to make it so that its always cheaper to go through the canal, rather than sail around.
Depends.. their fees are likely based on the saved time/cost of circling Africa, and calculated so as not to encourage other nations to construct workarounds themselves (if that’s even geographically feasible).. not on the cost of their service being down once people are already committed to it.
The cost to traverse the canal is likely to be as close as possible to the cost of the alternative routes (eg Cape of Good Hope) that Egypt can make them, while still providing the advantages of saved time and operational cost.
The cost here was for the interruption to the schedules, not the daily cost of operations normally.
I doubt it. It’s a significant source of revenue for a country with limited revenue sources.
End of the day, the big shippers can price in the two week delay to round Africa, and higher tolls could make a competing railway feasible. As it is China will probably have built a rail corridor in a few decades.
