[dawn53]

In recent months, refiners have cut back their production to match drops in consumer demand and prevent retail prices from dropping. This May, U.S. refineries have operated at an average of 86.5% of their maximum, while the modern average for May, especially before last year, was about 95%

So supply and demand doesn't work. Cut back on demand, and the oil companies cut back on supply.

I paid $4.07/gallon last night.

[SampleMan]

So supply and demand doesn't work.

See my #5. The world demand for oil has not dropped. You are mixing apples and oranges. We could cut our gasoline demand in half, but if world oil demand does not drop or world oil supply increase, our gasoline prices will remain not change. They are based primarily on the price of oil. A gasoline refining shortage can drive up prices for gasoline, but having a glut of gasoline will not decrease the cost because it is not a perishable item and has high raw material and production costs to recoup.

[SampleMan]

Here’s another way of thinking about it.

Let’s say you are making wood furniture and the wood for a table costs you $400 per table and you charge $600 for a complete table.

Now wood increases in cost to $1200 a table (because of other outside demands for the wood) and you charge $1400 for a completed table. The demand for tables then goes down.

Are you going to keep making just as many tables and cut your price per table, carrying an ever increasing inventory cost on the wood and labor? OR are you going to cut production and keep asking for a reasonable profit on the tables that you do make?

That is the relationship of U.S. gasoline prices and production to world oil supply and demand.

[mysterio]

So supply and demand doesn't work.

It doesn't work when you are talking about a monopoly essential good with inelastic demand.

Give oil based fuels a solid competitor, and watch the price sink through the floor. Remain reliant on oil for 90+ percent of travel and transporting needs, and watch it rocket upward. The choice is that simple. Replacing oil should be a national priority. And it should be the key plank of the WOT. Energy independence now.

[RinaseaofDs]

It’s oligopoly at work.