Is it possible for governments to lower the oil/gas price?

Question

Oil price at the pump is based on supply and demand wheras the price in the oil market is subjected to speculations and the value of the US dollar. OPEC has said that supply of the oil is sufficient for its demand.

Answer 1

Only if they have unlimited supplies.  The alternative is that if you fix the price suppliers will refuse to bring the commodity to market.  This was the big problem with socialist systems in Eastern Europe.  The governments fixed wages and prices so that everyone had enough of everything, but the speculators and black marketeers cornered the goods and broke the system. Farmers in particular are a painin the @rse when it comes to this, as the Russians repeatedly found and the Argentines are currently experiencing.  In fact, in the UK,, farmers are paid over the odds, as the landowning classes have always dominated government here. (We even have a royal family.  Laugh!!)

Answer 2

no the free market investors are making too much money from speculation and govs cannot suppress free trade the bubble will burst eventually and also the high prices create positive to find alternatives to oil we have a hardship now but it makes an oil free future closer than ever

Answer 3

You are mistaken. Oil and the Gasoline at the pump are all trading on the market. How the price of Gas came to be is no different than oil. You check it out at Nymex.com

OPEC is no fool, they will sell oil to whomever is paying the most. If Exxon goes to OPEC and says, I'll take 2/million barrels for $50/barrel, OPEC will laugh when Japan might say they are willing to pay $120/barrel.

The contract market with OPEC might be a little less volatile, but is never far from the traded spot market price for Oil.

Think about it. If somebody could get oil from OPEC at less than Market, the buyer would just turn around and sell it on the market and pocket the difference..

Answer 4

Well there is always a price ceiling where they set a maximum price. but the problem with that is that it would create a shortage.

Answer 5

If the government wanted to lower the price, they could, but not without consequences. In addition to supply and demand, the price we pay at the pump is also affected by the gas tax imposed by the government. These taxes could be eliminated, but they are often used to pay for new highways and highway upkeep. The government could seize control of oil companies like Chavez has done in Venezuela. That might artificially lower the price, but it would also eliminate competition. The government could slightly increase the supply of oil by opening up drilling in the Arctic National Refuge and other untapped government-protected oil-rich areas. The government could encourage the production of gasoline alternatives like ethanol made from corn or sugar cane through farm subsidies, but that increases the demand for those crops, which would increase the cost of other products made with those crops. Government could release more oil from its reserves which would temporarily increase supply. Government could lower demand by requiring all new vehicles to meet significantly higher MPG standards, and by building more mass transit. These costs, of course, would eventually be passed on to the consumer, would lower gas prices, which might only increase demand in the long run. Just a few of my thoughts...