Unfortunately, in this case the supply is being artificially manipulated. Just like how diamonds cost around a thousand dollars a carat.
Q: Why does gas cost so much? Can't something be done about prices in terms of production costs?
A: Gas costs "so much" because companies can charge "so much" and get away with it. Any savings is passed on to the groups who are in the fuel business to make money, not to the consumer.... and it's good, too.
No matter what the cost of gas is, the consumer will continue to buy and use it like it doesn't cost a thing. We'll complain when we put the gas in the car, but then every mile we're on the road we don't have any problem with taking the extra trips here and there to do something we really don't need to.
Yes, it totally sucks for people that have long commutes and have to spend an extra $100 a year in gas, because we'd all like an extra $100, but when you get right down to it, it's surprising that gas isn't well over $3/gallon now.
A: Gas costs "so much" because companies can charge "so much" and get away with it. Any savings is passed on to the groups who are in the fuel business to make money, not to the consumer.... and it's good, too.
No matter what the cost of gas is, the consumer will continue to buy and use it like it doesn't cost a thing. We'll complain when we put the gas in the car, but then every mile we're on the road we don't have any problem with taking the extra trips here and there to do something we really don't need to.
Yes, it totally sucks for people that have long commutes and have to spend an extra $100 a year in gas, because we'd all like an extra $100, but when you get right down to it, it's surprising that gas isn't well over $3/gallon now.
A similar principle applies to healthcare...the cost rises, yet demand is still solid and no one can do anything about it...but those doctors make it good on our pockets
America strives off of petroleum, we cannot survive without it, and therefore we pay a hefty sum in order to import the majority of it...
Now that we are making Swiss Cheese out of Alaska, I doubt the end justifies the means....but if it saves Corporate America $.20 a gallon on gas, who cares, right?
Two years ago I bought 2 big macs for $2. Now a big mac costs something like $2.50.
(actually, I have no idea how much a big mac costs now. ) Just because something used to be cheaper doesn't mean that was the 'right' price.
Oil companies raise prices by limiting production. They limit production because they can and so they make more money. Some of the cost is due to refining also. There are fewer refineries in the US thanks to clean air programs which also causes gas to cost more.
The McDonalds analogy doesn't quite fit unless you want to talk about the soda. $1.95 for a soda/iced tea shows inflation has made it's mark on the resturaunt industry. Except it only costs about 10 cents/glass to make soda.
No it didn't, but inflation is not the main cause of this rise...
1-Inflation
2-Supply/Demand (prolly biggest issue)
3-Oil execs with greed pockets...
Some ppl are relating Supply and Demand to a relative shortage...which is not true...You can have a loss and still produce, but not create a shortage...Any fluctuation in production can yeild an equivelant shift in price, especially to the consumer...
Everything "petro" based on it's price-axis has been heavily affected in the past ten years...
-Natural Gas
-Car prices
-Gasoline/Diesel
-Even oil changes (relative the cost in oil, and wage increases)
Inflation is not rational across the board. Milk used to be $1.50 now it's $3...but it took awhile to get there. Fastfood is more expensive...I don't think you will find a heavily used resource that has yet to be affected by inflation...
Then you can also get into the inflation/deflation caused by technology/discoveries...like how laptops used to cost $3,000 and now you can get one that is 100X better and only costs $500 AR...The technology was cheaper...
And then you also can see the affect of our petro useage...we are nearly scrambling to come up with a new fuel source...
The shortage isn't here, but it is coming..
You completely missed his point. The other posted gave inflation as the reason gas prices doubled in the last few years. It was incorrect. He gave McD's as an example that other products did not double in price. Again, it's because the doubled price in gas is NOT due to inflation.
You got lost in the details and missed his overall point, which is that inflation is not the reason that gas prices have doubled in a few years.
Not sure I believe everyting a cartel says. Doesn't really matter, from what I understand (I'm not an expert) the US gets most of it's oil from South America, and that OPEC doesn't have anything to do with it.
People keep yelling supply and demand, then proceeding to only talk about supply. Demand is a very large factor in current price increases from what I hear. The primary increase in demand is apparently the industrialization of China. Their consumption is growing at an alarming rate and isn't showing and signs of slowing down yet. While their consumption is no where near the US yet, I'm sure it has been a major factor along with the fear of supply running out as demand increases.
First of all, the US gets most of its oil from Canada. Secondly, the biggest oil produced in South America is Venezuela, and they're a member of OPEC.
But on a world scale, the demand is pretty steady. It's rising, but it's rising steadily. That can't account for the wild fluctuations in gas prices. Besides, demand isn't going down, but occasionally the prices drop drastically.
I agree on that part, I wouldn't blindly believe them either, especially when their best interest isn't to ensure that oil prices are as cheap as possible, their goal is to make as much money as possible.
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the increase in the price of crude has more to do with china than any other factor. two reasons for this. first, the decline of the dollar is directly related to our trade deficit, much of the increase of which is chinese. there are so many dollars swimming around internationally that the value of them is declining. the second reason is that china itself is buying more oil. a lot more oil. so, increased demand for oil raises the price, and decrease in the value of the dollar raises the price of everything purchased with dollars.
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you missed half of OPEC's interest. sure, it isn't in their best interest that the price drop to where their wells aren't making a profit, but it also isn't in their best interest that the price rise to where other existing wells and new exploration is profitable. if that is the case then the supply of oil rises independent of their action.
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