Greed-The real reason gas prices are so high

[blues2cruise]

and it's not Exxon deciding on the price of oil. Oil is a commodity and the market decides.

Which market? Certainly not the consumers?
Speculators on the trading floor most likely.

[jonnythan]

There are profits and then there is gouging. We are being gouged.

How do you support such a claim?

What else would you call it when gas goes up at the pump for a few days in a row, but yet there has been no new fuel delivery?

What does that have to do with [insert fuel company here]?

Those prices are not determined by how much the station paid to get its tanks filled. They never have been.

http://www.howstuffworks.com/gas-price.htm

Moreover, the fuel companies don't set the pump prices anyway!

You say "this is just a simplified picture," but, no offense, it appears you're offering a "simplified picture" because that's the extent of your understanding.

Oil prices are determined by the market. Fuel prices are determined by the price for oil, the cost of refining, the cost of transporting, taxes, etc..


If a company is maintaining the same profit margin, but revenue is going up, they make more profits in absolute dollars. This is not gouging.

To support a claim of price gouging, you'd need to support a claim that an oil company is pricing something above market value.

[Skier]

Dangit, jonnythan, that link is much better than the one I found.

[jonnythan]

and it's not Exxon deciding on the price of oil. Oil is a commodity and the market decides.

Which market? Certainly not the consumers?
Speculators on the trading floor most likely.

Yes, that is essentially correct. Cartels like OPEC influence the price significantly as well by influencing supply.... but the oil companies do not control OPEC either.

[koji52]

We as consumers have no real power in influencing the price of gas as its heavily demanded and there's very little alternative to using gas daily. We should be thankful with all the BS going on in the middle east that OPEC has less than half the oil in the worldwide supply. They used to have much greater control before oil exploration really picked up.

[mgdavis]

Dang, that's an old picture on the front page of that article. The first thing I noticed about it was the size of the station. The second: Regular unleaded was under 1.00/gal . That makes it 2002ish? [/threadjack]

[mgdavis]

I second what jonnythan and koji said, OPEC is largely responsible for climbing oil prices through their control of production.

Another factor that I believe influences oil prices are developing nations, such as China. I know that China has had a significant effect on other resources through their ever-increasing consumption.

The oil companies are making large profits, but look at their net profit as a percentage of their gross, and I think it would not seem so excessive. I, for one, say that they are welcome to their profits. If you don't want to pay the high prices for fuel, use less fuel; sounds like a great excuse to ride a motorcycle. [/ramble]

[jonnythan]

Think of it like this:



10% profit off $120/barrel oil is twice the overall profit in dollars of 10% profit off $60/barrel oil.

So, is it price gouging when the oil companies are making approximately double their profits as compared to a period when oil was literally worth half as much as it is now?

[blues2cruise]

http://www.howstuffworks.com/gas-price.htm


Very good site.


You say "this is just a simplified picture," but, no offense, it appears you're offering a "simplified picture" because that's the extent of your understanding.

Perhaps you are right, I have a limited understanding because my knowledge about it is limited. However, as a consumer who has to take my car off the road because I can't afford to fill the gas tank anymore, (me, myself and I being used generically for millions of people in the same boat...that would be a rowboat because we can't afford the marine fuel for a power boat ) all we can see are the humongous profits and gold plated Mercedes of the oil shieks.

Oil prices are determined by the market. Fuel prices are determined by the price for oil, the cost of refining, the cost of transporting, taxes, etc..


If a company is maintaining the same profit margin, but revenue is going up, they make more profits in absolute dollars. This is not gouging.

To support a claim of price gouging, you'd need to support a claim that an oil company is pricing something above market value.

As an aside....Canada is not an OPEC country.

[koji52]

Canada supplies all of its own gas? Even if that was the case, Canadian oil companies would not be able to offer their gas at prices significantly lower than what everyone else is in the world. If they were able to, there'd be an arbitrage opportunity, which would not last very long. People would buy up cheap Canadian gas and sell it else where.