why are gas proces so dang high?

Question

now theyare saying that the oil refinery that provides 8% of americas gas is going to be shut down for matanence, 8% ? that means it's going to jack up gas prices? and for theoil companies to be maknig 100% profits, is there really a shortage? well everytime i go to wal-mart to get gas there is a gas truck from florida, dosent seem like he has trouble getting there and filling the tanks up...something is not right about this hole thing, and something needs to be done.

Answer 1

There are many reasons for the high price of gas, just don't expect all of them to be pleasing to you.

First of all, capitalism means that the seller gets to set his own price without interference from government regulators, so no price caps are imposed. The only thing effecting the sellers ability to set his own price is 'what the market will bear', or what consumers are willing to pay. Because gas is essential to the lifestyle choices of Americans, prices can rise dramatically without impinging greatly on the average consumer's willingness, however reluctantly, to pay. If you choose not to consume the product when the price rises (i.e. take public transit and park the car, turn down the thermostat in winter, turn it up in summer to consume less energy and help lower overall demand - some electricity is produced by burning oil or natural gas).

Given that oil reserves are in decline globally, we can all expect that fuel costs will continue to rise at hyper inflationary rates -- that is rise faster than the cost of other goods and drive other prices up. This process will only accelerate if, as we are told, the resource starts to dry up entirely. The last barrel of oil will be the most expensive one, if demand does not decline sharply before then.

In addition to the ultimate supply question (how much oil in total remains) there are supply access concerns that can dramatically affect prices. If the remaining supply tends to be in regions of the world that are politically unstable or even embroiled in open warfare, then the cost of extracting oil and bringing it to market becomes a lot higher. If you were an oil field worker, how much would you demand to go into, say, Iraq to extract a barrel of oil? I'll bet you'd want a pretty high premium for your labour. So long as the Bush Administration continues its policy of provoking war and conflict around the world, particularly in oil rich regions, you can expect this problem to get worse also.

Finally, there is the greed question, already implicit in much of what I've said above. Yes, the people who run oil companies are greedy, just like the people who run most other kinds of companies. Greed is the operating principle of capitalism. While prices at the pump have shot through the roof, profits have also climbed to the sky. This will also continue. Any consumer thinking that the oil companies can be persuaded to cut their profit margin in order to give some relief at the pump simply does not understand either the dynamics of the business nor of the economic system itself.

The only part of the whole equation you can control is your consumption. If the price is too high, change your lifestyle so that you consume less. If you live in a city, do you really need to own a car at all?

Answer 2

Supply and demand is correct. One of the reasons the oil companies are recording such huge profits is because they are not allowed to use those profits to build new refineries. The last refinery built in the US was in the 1970s. Anyone with good business sense would know that if you have a product to sell, you would want to sell as much of it as you can for the lowest price you can. Removing the restrictions that the libs placed on the oil companies and allowing them to increase their refining capacities would decrease the price of gasoline dramatically.

Answer 3

The war in Iraq is creating the shortage in supply here at the home front. We are supporting a combine force of 400000 troops in a mechanized war. Tanks and armored equipment consume several gallons of fuel per mile, not miles per gallon. Without fuel rationing, prices go up. Stop the war.

Answer 4

I'm from nw Ohio and he have alot of refineries in our backyard basically and it's still expensive. I can understand competition for the Ohio to refine it; but 10 billion dollar profit hmmmmm and where did bush's fortune come from huh oil. It's completely criminal.

Answer 5

Hurricane Katrina, verbal altercations with Hugo Chavez, Iraqi Conflict, and now BP has to shut down one of it's main pipelines.

Answer 6

The price of oil is high so that oil producing nations will have enough money to buy weapons and keep their despotic rulers in power.

Answer 7

two words: Supply / Demand

Another way of putting it...

The prices are what they are, because they can get that price for it.

Answer 8

P R O F I T