Indyphil

Who's Really to Blame for Rising Oil?

I disagree with the article
"The energy sector is finding the max price that consumers are willing to pay for a gallon of gasoline. Record profits of oil companies give them no incentive or evidence to halt gasoline price hikes."

The price of gasoline at the pump is basically wholesale + tax + tiny margin for the owner of the store.
Wholesale price is basically crude oil, + processing cost + refiners margin.

There is every incentive for an oil company to reduce the price of its wholesale gas - TO COMPETE!

Lets say "the bubble bursts" or whatever and the price of oil starts to fall. The author of this article suggests that the price of gassoline wont come down because they have discovered that we are "willing" to pay $3.70 a gallon or more for gas.
But with lower raw materials it only takes one company to price itself 10 cents less than the competition and every consumer will rush to buy it. the fact is there is more than one oil company and they must compete for the business. The fact that margins are so slim is evidence that there is still plenty of competition.

The price of oil is not set by Exxon, BP or shell. Its set by Global factors, and the majority of the worlds remaining oil is owned not by private companies but by national oil interests. The traders know this, look at the long term contracts. Why is it so hard to face the truth? When you point the finger of blame three fingers point back at you.

Oh and the "lets not buy gas on one day" ideas.
Boy I still get a chuckle from those! Skipping your gas purchase on Sunday only to buy more on Monday - yeah a real revolution!