How can the oil companies justify the increase in gas when they are posting record profits?

Answer 1

THey can't - they are just bilking all of us.

The companies and OPEC blame supply and demand, but if you look, there are no real supply problems (even though demand does tend to rise in the summer here in the US). The price fluctuations are a result of commodities arbitrageurs. These are people, funds, and organizations that trade Gas and Oil "futures" on the commodities market. If there is an international crisis in the Middle East, like with the British Sailors in Iran recently, the arbitrageurs speculate that prices of oil willl go up as a result. Thus, they start buying futures contracts like crazy (A futures contract is a contract to accept delivery of X amount of Oil at whatever price the market has set for that trading period). The more these as*holes buy, the higher the prices for these contracts go, thus bringing the price of oil up. Once the incident ends, they sell off their futures and the price drops.

A lot of it is artificial, and increase in price is often manufactured by the arbitrageurs for them to make money on the contracts they buy at the beggining (at the lower price), which they then sell once they've driven the price up, for a profit.

It sucks, and all of us are paying for it.

Answer 2

The Oil companies are in business to make profits. Specifically, for the shareholders. By definition, that is their first responsibility. You and I and everyone who owns a mutual fund, has a 401K a Pension fund, WE are the shareholders.
Why is it that we all get upset with the idea of the Free Market and Capitalism at others, yet we want to earn as much as possible for ourselves? I am guilty of that too.
In America, if we get fed up with gas prices, we use alternative energy sources. That is Capitalism. Contrary to popular belief, there are many and we do not need to use our cars as much as we do.
Since August of 2006 I have not driven a car. A bicycle, and the bus system work great. I wear a suit and tie to work, and wear a Rain Suit in bad whether. I live in Fresno, Ca., not N.Y. or San Fran. where everyone uses public transportation.
If enough actually do something about gas prices, and instead just blame the Oil Companies, the Market ALWAYS corrects....

Answer 3

Because they're essentially a protected monopoly. OPEC sets pricing and production levels, and the rest of the world just goes along for the ride. If it really involved supply and demand, and the free market system, at least a couple of the players would undercut the competition to increase their market share and we'd see prices fall dramatically. Like the North and South American oil industry, for instance.

Since GWB and the so-called "free market" Republicans get a great deal of their funding from the oil industry, and in fact made their personal fortunes from it, don't expect to see this conspiratorial monopoly challenged any time soon.

Answer 4

What is an oil company trying to do? They are out to make profits. But, I doubt many people complained when (if) oil companies had been losing money.

At the same time, there is this little thing happening called inflation. So, just like box office numbers for movies will always increase, the profits for all companies will tend to increase just because prices in general have increased.

Answer 5

Every time the Middle East has even a minor escalation, or North Korea has a nuclear temper tantrum, oil prices go up because Wall Street has an anxiety attack.

The International community follows suit, and the cool headed folks who control the oil increase the price of a barrel of oil, therefore giving American oil companies the excuse they need to garner profit from stupidity.

They all laugh all the way to the bank, and we're stuck swearing at a gas pump.

Answer 6

One thing has nothing to do with the other. As long as gas is consumed they will make a profit. 20% of $100.00 is $20.00 the same 20% of $150.00 is $30.00, the point being is that even if they maintain the same % of profit, being the price higher, the amount of dollars will be higher.

Answer 7

They have every rights to increase or decrease gas prices. Its similar to supermarket, how do they justify with their pricing? They have all the rights!

Answer 8

Because everything they say on the subject is a lie. www.infowars.com

Answer 9

Very simple answer here. They give campaign money to your elected officials. In other words, they buy the politicians. Duh.