Is the oil shortage and price hike yet another con bythe oil companies? ?

Question

The producers sell it to the refiners, the refiners sell it to the wholesalers and the wholesalers sell it to us.

Given that at each stage the company selling the oil to another company owned by itself and so on. Surely this is artificial shortage brought on to increase prices because have you noticed it never ever goes back to the original price

Answer 1

I agree oil has gone down $40 and we have only seen $0.37 drop at the pump where I am at.

Answer 2

yes and no.

quick quote "Ever notice how gasoline prices go up like mercury but go down like molasses?"

If the refiners are set up so that they have to buy oil in real time then they do have to sell the higher priced stuff before they can buy cheaper and pass it on. i have no idea how long this takes, how much they store. but they must be in cahoots to some degree.

As a good thing. high oil prices will help local manufacturing jobs because it will make shipping costs from china and others countries more expensive. Also efficiency will go up finally. everybody had to have an SUV that sucked mucho gas. its like a heroin dealer giving free samples and once the people get hooked jacking up the price.  

Answer 3

Nice try, but no cigar.  There are many producers in many countries, there are many refiners, and many wholesalers, etc.  It is a free market and a competitive market.  The function of the gasoline price follows the laws of supply and demand.  We refuse to drill more wells, the EPA rules made the cost of refining so high that many refiners in the US closed their refineries and tore them down, some wells were exhausted, we prohibited the buillding of nuclear facilities, we passed many rules to make it more costly to use coal for electricity, we made it more difficult for pipelines to bring oil from Canada and Mexico---THUS THE SUPPLY OF OIL WAS REDUCED.  There has been a great economic boom in the US, many more cars in the US and all over the world.  An economic boom in Europe, especially eastern Europe and Russia, and Japan, and India, and especially China.  THUS THE DEMAND FOR OIL HAS INCREASED.  Guess what?  Reduced supply and increased demand equal higher prices.  We are going to have a temporary reduction in prices because of the coming world wide recession.  The recession will be short. and then it will begin again.  We must find ways to decrease our demand.  The price of oil will take care of much of that, but we must also take steps to increase supply.  If we start planning now, we might start having some supply results in five to ten years.  The public needs to understand the problem so that the government can reduce barriers to solving the problem.

Answer 4

I would say there is a shortage of oil!  With china and india becoming more developed there demand for oil has gone sky high and the population of these countries is huge compared to the uk and us ( who are still using way more oil than we should!)  And also due to the ridiculous taxes in the uk al least this will continue to put the prices up!  In the Uk a few big supermarkets have decreased their prices by around 3p per litre but apart from that not much has changed!

Answer 5

I agree, oil prices are being driven more by speculation than anything else. Commodity funds have invested $252 billion in 2008 in Oil futures which is more than ten times the amount they invested six years ago. All this is really driving up oil prices and creating a fake shortage.

For all the people thinking India and China are driving up prices, read the link below to get a feel on the numbers that these two countries consume. China 6.9% of total and India 2.4%.

Could these countries have really driven up oil prices?

Answer 6

There is not an oil shortage per se.  The demand for oil has increased while the supply has remained the same.  Many countries such as Mexico and Iran are actually producing less oil.  They are not doing this to artificially raise the price, they simply do not have the technology to get more oil out of the ground.  It is not a shortage, it is just a flat supply curve with an increasing demand curve.  Prices do get pushed artificially high for reasons other than supply and demand - speculators caused part of the run up, and so do geopolitical issues.  When Iran makes threatening comments, oil tends to go up.  When Hugo Chavez does the same, oil goes up. When a terrorist blows up a pipeline in Nigeria, or a hurricane approaches oil platforms in the gulf, oil goes up.  Remember, oil is a commodity, and is subject to continuous price fluctuations.  Those who purchase commodities directly buy them at the lowest possible price so they can resell at a higher price.  Blaming oil companies for the current price of oil and gasoline is greatly oversimplifying the issue.  

Answer 7

There was never an oil "shortage."  The oil cartel, OPEC, has kept production lower than the demand for oil from developed and developing nations has risen, thus keeping the world price for oil high in their own interest.  Oil companies in the US have little control over the world supply of oil.

Bush went to Saudi Arabia to beg them to increase production but apparently they ignored his pleas.