Why does the price of oil change with events when the cost to produce it remains the same?

Question

I understand that the stock market changes that, however it seems real easy for an oil company to "create" an event to raise prices. Should the price be regulated like other industries so they have to justify increased costs to raise prices? They are making a killing profit wise with everything going on.

The supply and demand is a good point. That is why maybe the price should be regulated. Because the cost of production still remains the same even in a shortage. It just means there is less to distribute.

I know that other countries play with the prices but is that just a failure for us to negotiate or are we slaves to that? For example, gas is .65 a gallon in Kuwait. In most European countries it is $6 a gallon. So the cost to produce is not much and for the US even adding the .35 tax per gallon still should be around a dollar.

Answer 1

Come on Fantasy Girl. Stop living in a Fantasy World.
How come the price of a bannana changes if the costs to grow it remains the same?
How do you know the costs to produce oil are the same.
Maybe they have to pay corrupt governments more money for the right to drill in their country.
Maybe their security costs protecting the oil fields are higher in this post 9-11 world.
It might even cost them more money to ship it.
Maybe the price has actually gone down and it just seems like we're just paying more because the value of the dollar has fallen against other currencies.
Come on Fantasy Girl. Close this question out and vote my answer the best.
But what I still can't figure out is why does the price of a bannana change. Maybe the monkeys are eating more of them?
That could be. Less bannana's left over for us and the price could go up.
Maybe that's just what they want us to think?
Nah!!!

"Yes. We have no bannana's today".

Answer 2

Please understand that oil used to be sold as a regulated commodity. Just a few years ago, oil futures became publically traded. Investors now are setting the pricing per barrel of oil. This is why, when there is news about some oil spill or most recently some Alaskan pipeline having problems, the price of oil per barrel shoots up. Investors see the profits in oil as the supply diminishes, and they buy oil futures. Check out my 360, I'll be going into stock environments along with other trading techniques from a blue collar perspective.

Answer 3

Oil is a commodity which has factors other than demand and supply considerations for its price.
People who stockpile oil release according to the benefits creating an artifical shortage of oil worldover. This coupled with cost of war being charged to other countries through oil price. These two are the major factors for change in oil price though the cost of production remains the same.
VR

Answer 4

you are so right. but it comes down to supply and demand. the oil companies can actually easily meet the demand, but if there is any instability that threatens supply, or if there are any events that actually restrict supply, the price will rise.

the recent decision by BP to shut off their alaska pipeline is a prefect example. This does actually restrict supply, not to the extent where there is any possiblity of running out, but it restricts it anyway and this pushes the price up.

It is so easy for the oil companies to find any excuse to keep the price up. They are making Billions in profits from it.

Answer 5

convinced it may, in various techniques it may surely help contained in the destiny, with OPEC pondering the U. S. is making use of its personal oil reserves besides as promoting its personal to different countries, OPEC will decrease its expenditures to compete adverse to the U. S.. Jobs will be created contained in the approach and the cost for gas on the pump could properly be considered interior both dollar mark, if no longer above the a million dollar mark itself. for sure you'll see enviromentalist and leftist complaining and protesting therefore. for sure they are going to also lie and carry forth that their isn't sufficient oil contained in the international. believe me, there is an outstanding style of oil. we've untouched reserves if no longer all for the time of the country and their remains the total pacific, gulf, and atlantic it incredibly is untouched. As for our oil reserve, we've better oil then only 3%, thats nonsense, we've over thousands of trillions of barrells of oil and the rationalization we've not used it really is because it truly is for emergency applications. no longer to point that we've stepped ahead purifier techniques to get better oil, the in easy words reason BP disaster changed into so substantial, changed into because the employer that had planted the rig there had very adverse protection criteria and adverse mantainance therefore.

Answer 6

Regulate the price of oil and you would be able to buy oil (or petroleum products) at that price....That is if the producers would sell them.

A producer could possibly refuse to sell a product at a regulated price when the open market would mean he could sell at a higher price.

Answer 7

It is one of the biggest legal scams in the world. The oil companies are too powerful plus governments aren't going to do anything about it because they make a mint taxing the stuff.

Answer 8

supply and demand is what decides the price of things... the supply of oil goes down, we demand more - therefore the price increases...

Answer 9

its not the opil companies themselves... its the countried from where the oil is taken from.. the official in thoes countries up the price of oil during times of war out of spite to put it simply... they know that we will pay whatever it takes to get the oil becasue our lives depend so much on their oil.

Answer 10

supply and demand is bullsht because china buys the majority of the crude and they get it for about two dollars a gallon.