How do gas companies make higher profits from high oil prices?

Question

I know this sounds like a naive question, but it seems like if supply is set by OPEC, gas companies would be paying those countries higher prices for the raw crude, so they wouldn't come out that much better. Do they make higher profits because they get a proportional mark up on a higher base price? Or is it because the gas companies have reserves that they have purchased previously at a lower price, but are now worth more? Can someone explain the economics of the oil industry to me?

Answer 1

They only thing I can tell you is that Exxon made 10 billion dollars last quarter...they steal from people...I know we live in a capitalist society...but there are people dying everyday from starvation and disease...they should have to donate that money to a worthy cause

Answer 2

Ok it goes like this Oil prices go up a few dollars a barrel
1 barrel = 42 gallons of oil
42 gallons of oil = 21 gallons of gas appoximately (there are a lot of things they get out of 1 barrel other than gas)
They always reaist the price of gas so that they make more than the few dollars the price went up, the manufacturing costs don't change, so their profits go up as well.