collusion or not?

Question

I would someone to explain to me why the price of gasoline has gone down this summer instead of up due to the summer driving season, as in past years. I do know from asking that people aren't driving less because of the price; just sucking it up. If it's supply and demand, it should be up near the record price I saw pre-summer $3.50ish (Northern California). Call me a cynic, but I 've seen this pattern before. They [oil companies] give some tenuous excuse about refining capacity, maintenance, etc., allow the price to max out and when people start complaining, they back it off and wait for people to get use to the higher price range. I know the price of crude is mostly out their control since we import so much.

Someone please enlight me. I would like to think that free market forces are at work here. I know the price of crude is mostly out their control since we import so much.

Answer 1

Allot of people does realize that in the gulf we have multiple platforms of oil drilling. So last two years there was the Katrina effect. The oil the comes from the gulf can stabilize a little prices. So after the rebound of transportation and oil drilling in the gulf gas did not spike that much this year. When the price goes high does not necessarily has to do with the crude or international market also has to do with the reserve in the US. if for some reason something happens with our drilling here then the price goes high so demand slows a little so in raw terms we do not run out.

Answer 2

No collusion. You are only looking at the demand side, not the supply side. Gasoline prices are highly elastic, a small shift in supply has a very large impact on price. Petroleum prices are actually way up, but the refining capacity since Katrina has gone back to what was normal. Also, storage capacity has gone up. Prices are so volatile because the supply element is so tight. If more refineries come back online you should see the price fall further.