Why the sharp increase in the cost of gasoline even as the price of a barrel of oil stays relatively steady?
Answer:
Oil prices have only been steady recently. Fred is the only one that is close. There are many factors that go into it but I'll over simplify since I'm tired!
1) Oil Supply: Costly and difficult to get at - the "low hanging fruit" is long gone.
2) Demand: Record demand worldwide. US, China, India etc.
3) Lack of exploration in USA due to "environmentalists". Can't drill off Florida, California, ANWR (ANWAR)
4) NIMBY's (and enviros) - "can't build that refinery here"
5) No uniform standards for fuel. CA can't buy fuel from AZ or NV, NY can't buy from CT, PA etc. to meet short-term demands due to refinery outages, disasters etc.
6) Government mandates: Take out the lead, add oxygen, lower sulfur, remove MTBE, add ethanol etc. etc. etc. The new ethanol requirements alone are VERY costly as well as individual state fuel formulations (see above) and seasonal fuel adjustments are costly as well. If the oil companies add a profit margin to the extra costs they incur, so be it. We (as the Government) are asking them to invest more money in technology, R&D and formulations so why shouldn't they get a return on that extra investment as well. Any business would if they can.
7) Taxes: A BIGGIE! State Federal and local taxes are over 60 cents per gallon and the sales tax is tied to the retail price. So just what is the gov't doing with that $$$, surely not fixing roads in CA.
8) As far as the evil oil companies go, they charge what the open market sets as the price for oil on the OPEN, PUBLIC and INTERNATIONAL markets. There are several large global oil companies (they need to be big to invest the huge capital needed for the risk involved) and they get what this open market says they will get. Put yourself in their shoes. If you were selling your home and some guy from China or India or Kansas comes along and out bids the next guy (like what has happened the past few years in real estate), what are you going to take for your house? The LOWER price?! No way.
In addition, none of were complaining when we had below market, well-below-inflation-adjusted prices and some of the oil companies lost money for almost 20 YEARS! Remember the Houston real estate crash in the 80's? I do.
As far as the oil company profits go, they are very large companies and as a percentage of sales, their profits are average or slightly below average. Their average profit margin is 10%. What is your company's, hmmm?
The next time some politician whines about gas prices, ask them how much of the recent tax revenue increases the gov't is collecting are they willing to cut? What new mandates are they going to roll back. It seems the only thing they want to end are the tax reductions we are enjoying (meaning raise taxes). Every time the congress changes something with fuel, hold onto your wallet.
Finally: Want gas prices to go DOWN? Stop using so much fuel. The law of supply and demand will take over and prices will drop! That is until the Government(s) realize their tax revenue has dropped and they raise gas taxes to compensate. :-) (read this on hybrids and fuel taxes: http://townhall-talk.edmunds.com/direct/... )
Oil companies are greedy dicks and can get away with it.
Money. It is time for americans to go on vacation and long drives. Summer is here almost.
alot of oil is in iraq and afganistan, well we bombed them they stop selling to us! plus the hurricanes!
something about oil refineries struggling to keep up with demand or something
Because the liberals have keep the oil co. from building new refineries and the ones they have are getting old and need repair.
http://en.wikipedia.org/wiki/2003_iraq_w...
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