Am I missing something on the massive oil profits?

Question

You hear conservatives complain that the government is making billions on gas through taxes and the poor oil companies aren't making but a couple of cents on each gallon.

That may be correct, but isn't the premise wrong. It's not gas they make big profits on. When the price of raw materials go up, you raise the price to maintain your profits. Oil is going up so the price of gas goes up. But if your profits are rising, doesn't that mean you've raised your price more than the marginal increase in your raw material? The owner of the gas station makes his profit on gas and all the conveniences and he's not seeing much of an increase in profits.

But "Big Oil" isn't paying more to get it out of the ground today than they did yesterday. But because people are driving up the price through speculation (more than through demand) they are making record profits.

Now I'm not saying they should lower their price of the raw material, oil, but it's easy to see why they have record profits

Answer 1

This is a win win situation the oil companies make big maney the rest of us drive less and helps the enviorment. now i don't drive i take the public transits(public transits are brilliant you don't feel guilty about polluting and you can sleep while riding to work) so i don't know the pain at the pump.

Answer 2

I too have wondered about this.  If places like Dubai (sp?) and Russia are booming from the rise in oil prices, how can they say the record high prices are only the result of inflation and supply and demand.  They are charging more for gas and making MORE profits...So obviously something else is going on.

Record gas prices--> record profits in the oil companies....hmmm.  Do they think we all fell off the turnip truck?  h**l, no, that thing ran out of gas!  LOL.