Why are gasoline prices high?

[HankReardon]

If Free Market forces and not gouging are responsible for the high gasoline prices why does the oil companies' profits increases dramatically when free market forces and OPEC production reduction causes prices to rise? This question was asked of me and I did not know how to answer.

[Monty22]

They are gouging.

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[muawiyah]

Well, have the oil company profit margins improved?

I've been keeping all my money in a fund that tracks the Wilshire 4500, which is the same as the Wilshire 5000 less the S&P 500.

Over the last year and a half we've made twice as much in the market per dollar invested as the S&P500, which is where you find all the oil companies.

You'd think improved profits for the oil companies would have been enough to move the value there, but it didn't compared to the sectors that include NO oil companies.

People who worry about oil company profits and not about getting the best value for their investment dollars are probably going to end up poor and on the dole.

[HankReardon]

Please expound upon on your view that they are gouging. Considering all they have to do to get the crude oil, transport it to the refinery, refine it, abide by government regulations, EPA, employee concerns, market it, delivery it to the pump, and much more I am amazed they have been able to keep the price as low as they have for all this time.

[Cicero]

Well, there are numerous reasons why they are high.

One is that people are driving bigger cars and driving more.

One is that there is a shortage of refinery capacity in this country due to government regulations.

One is that it's about that time of year when the Environmental Protection Agency requires refineries to switch over from winter blend to summer blend. Refineries have to be shut down while the switch is made.

One is that Opec has cut back production. The free market will adjust to that, but it can't adjust immediately.

One is that clinton set aside the antitrust regulations and let some of the big oil companies merge, notably Exxon and Mobil. Texaco has also merged with Shell. That makes for less competition.

The market will make adjustments. But it takes time. And the more the government intervenes the less efficiently the market will work.

[Monty22]

"One is that clinton set aside the antitrust regulations and let some of the big oil companies merge, notably Exxon and Mobil. Texaco has also merged with Shell. That makes for less competition"

Bingo, that's the biggest part of it.

[Lunatic Fringe]

They are not gouging... geez, we still pay some of the lowest gas prices in the western industrialized world.

I have a 10 gallon tank, and pay about $1 per week more than I did last year. (Last year's prices were just a little less than they are now).

Why do we go through this every summer? Why are gas prices so "high"? Same reason the price of a gallon of ice cram is about $4.59/gallon.... supply vs. demand.

[templar]

I may be wrong, but I imagine they may work on a markup percentage. The higher the wholesale prices (at each level) the more dollars are generated with the same percentage. (i.e. 1% of 1 dollar is a penny, 1% of ten dollars is a dime).

[Paul C. Jesup]

They are gouging.

I hope they enjoy the money they taken from us because if they keep this up they are going to drive this economy to point of collapsing in on itself.

[wheels]

Also consider that China, for the last year, has been going through a boom in auto sales likened to none. More autos, more gas. There is just not enough to go around any more. We, as the driving public, are going to have to get used to shortages and higher prices because there are a lot more autos today than there were just a few years ago.

[spunkets]

"This question was asked of me and I did not know how to answer."

How do you know the "facts" given in the question are true? In the US, the price reflects demand, capacity and cost of crude. Given the competiiton, high profits mean demand in excess of capacity.

[ml/nj]

I did not know how to answer.

When I graduated from college (1968) the NY Times cost ten cents, and gasoline was something between 25 and 30 cents a gallon. Now the Times is a dollar, so if gasoline had risen in proportion to the Times price it would now be $2.50 to $3.00 a gallon. It's consderably less.

Is the Times a bad yardstick? The NYC subway fare was 15 cents, now it's $2.00 (and subsidized by motorists). Top ticket for a Giants football game was five bucks. Now it's 85. The libs are so busy printing money that they cannot keep track.

ML/NJ

[Monty22]

I work at Exxonmobil, our department is getting offshored to Canada. The accounting department is going to south america. They make $6.6 billion profit per quarter.

It's bad.

[templar]

They are not gouging... geez, we still pay some of the lowest gas prices in the western industrialized world.

info

[GailA]

Add NO Drilling the ANWR..idle wells in S. Illinois that have been idle since at least 1984.

[TaxRelief]

Simple: The value of the dollar has dropped on the world market. If the dollar weakens by 20%, the price of everything we buy from foreign countries goes up proportionally.

[Paul C. Jesup]

This insanity and stupidity in government and corperate-socialism is risking the very future of the human race.

[KarlInOhio]

They are not gouging... geez, we still pay some of the lowest gas prices in the western industrialized world.

That's because our government is less effective at tax gouging that the European governments are. The gasoline itself is a small part of the high price at the pump in other countries.

Another problem is that the dollar is down against other currencies. OPEC is trying to get more dollars because those dollars are worth less than they used to be.