2006-07-21 08:30:58 · 9 answers · asked by Anonymous in Social Science ➔ Economics
No one has indicated the sources for their answers. ThereforeI have to ask "Do any of the answerers to my Q have direct personal knowledge of the oil industry and oil economics or are the answers based on general knowledge obtained in a course on economics or from experience in a non-oil business selling or buying other kinds of commodities.
Q answer period will be extended to allow for more responses.
TWH 07222006
2006-07-22 05:04:46 · update #1
Fixed by suppliers and speculators. If there was actually a free market, then every gas station wouldn';t have the same price.
2006-07-21 08:32:34 · answer #1 · answered by ceprn 6 · 1⤊ 0⤋
Crude oil and gasoline are commodities that are traded on boards of trade around the world. The buyers and sellers meet either in person or through some sort of electronic medium. Prices are based on demand, production and the psychology of the marketplace (psychology is the most difficult part of the market to accept, but it is real and exists, rumors, fears, reports and general feelings people have all have an effect on psychology). Markets are also effected by people who look at historical price charts to try to forecast what the market will do based on different aspects of the charts. There are many different schools of thoughts on what different structures in the charts mean and its difficult to know whether or not these schools of thought have any validity or if they are only true because traders believe they are true....its not really known or even matter because at the end of the day the market is always right. Oil and gas prices are then based off these prices which are set by the traders. Sellers try to get the highest prices possible and buyers try to get the lowest price possible. Are markets manipulated? Of course! If you own all the supply you can decide how much you want to sell. That is decided by how much money you want to make... to cover costs, living expenses etc etc. The more you sell the less each individual item will be worth. If there are a lot of buyers they can make the price go up because they all have needs for your commodity and the ones who pay the most will be able satisfy their needs because they will be the ones who buy. If there are few buyers with low need, then prices go down. The price of the oil then effects the prices on down through the supply chain until it gets to the consumer. With each person in the chain wanting to make some money...if the demand for the product is more than what the supply of that product is then the price goes up...that is why gas is more expensive now. Prices are set at the pump of course but I have some friends who own some gas stations who said they try to keep their margin at 10 cents per gallon of gasoline. Anywhere along the supply chain that there is a bottle neck that reduces the supply at any given time will cause prices to move up. As long as there is more demand than what is able to be supplied prices will go up. This is basic economics
2006-07-21 09:41:38 · answer #2 · answered by erik c 3 · 0⤊ 0⤋
Because of the lack of elasticities (technologies that replace oil), the price of oil is determined by the market forces, although the oil market itself is strongly influenced by corporations. Basically, as long as the demand for oil is increasing, and the production is relatively constant, the price of oil will continue to raise.
2006-07-21 12:27:50 · answer #3 · answered by urosandrej 2 · 0⤊ 0⤋
Both - sort of.
The OPEC decides on how much arabic "crude oil" will be on the market, but then the market can respond to that by either lowering demand for oil all over or buying from other suppliers (north sea, Siberia, alaska, texas...)
2006-07-21 08:36:16 · answer #4 · answered by Invader Zim 5 · 0⤊ 0⤋
Crude oil is still determined by the market. It is a commodity and its price is market driven. Therefore what we pay for a barral of crude oil so will China and India.
2006-07-21 08:53:46 · answer #5 · answered by merdenoms 4 · 0⤊ 0⤋
Presumably by a free market. The catch is that the large oil companies *are* the market.
2006-07-21 08:32:54 · answer #6 · answered by Anonymous · 0⤊ 0⤋
in simple terms placed, the cost of gas is the real element the place customer call for coincides with grant. In different words, the cost of gas won't in any respect upward thrust above what customers are keen to pay. If an Oil employer has 50 gallons of gas, and at a cost of $2/gal, 60 gallons are demanded, the employer will develop expenditures. Say they develop it to $3/gal and in elementary terms 40 gallons are offered. The equilibrium cost is subsequently someplace between $2 and $3. it fairly is how cost is set, and that's clever to undergo in innovations that earlier you whinge approximately "gouging". no one is forcing you to purchase that gas; you have subsequently desperate that paying $2.ninety for a gallon of gas is greater perfect than the alternative- having no gas in any respect. it fairly is the loose marketplace at artwork.
2016-11-02 11:51:34 · answer #7 · answered by shea 4 · 0⤊ 0⤋
oil is sold on the stock market.. so when the price of gas goes up it is due to the price of crude oil going up on the stock market...
2006-07-21 08:33:02 · answer #8 · answered by Justin 2 · 0⤊ 0⤋
Neither. They are determined by hoarders' expectations and available storage space.
2006-07-21 08:42:41 · answer #9 · answered by NC 7 · 0⤊ 0⤋