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I understand economics pretty well. When a company is paying record prices for the raw materials that it uses in its products, that squeezes profit margins. When you simultaneously announce record profits, either your sales volume has made a huge jump (a larger increase than normal since your margins are being squeezed by raw material prices), or you've raised your prices proportionally more than the decrease in margin that the high raw materials prices have created.

It has to be one or the other. Given that I still believe in elasticity of demand, it's hard to believe that sales volume has increased dramatically in the face of a doubling of gasoline prices, unless there's a big jump in overseas sales that I don't know about. I keep hearing about increases in demand overseas, but never hear numbers.

I also don't understand why, if the demand for oil overseas has been increasing steadily, why we've had a sudden jump in gasoline prices at the pumps, instead of a gradual increase. If the oil companies have raised their prices, I don't have an issue with that, since it is a free market, after all. Of course, the oil companies are an oligopoly, so they can pretty much raise their prices in concert without actually colluding.

I'm not saying there is a nefarious plot. I just don't understand the economics of the oil price boom, and I understand the economices of most industries pretty well. I'm sure there are good reasons for the increases in gasoline prices, it's just that I don't understand what they are. Any insight you can provide would be welcome.

I keep hearing about increases in demand overseas, but never hear numbers.

Not to hard to find.

International Petroleum (Oil) Consumption
http://www.eia.doe.gov/emeu/international/oilconsumption.html

Oil Market Report, International Energy Agency
http://omrpublic.iea.org/