Oil prices plummet ..SO WHY Then?

Question

Isnt the Prices at the Pumps Plummeting as well ?

Speculators can cause Prices at the pumps to inflate real quick then why cant the Truth cause them to Deflate just as fast or faster ?

Answer 1

The whole theory of the market goes back to a book by a guy named Adam Smith, 'The Wealth of Nations'.  He explained in this book, 200 years ago, that prices are set by a free market, by the interaction of supply and demand. Governments, he said, should just stay out of it, the market will be moved by an 'invisible hand'.

This theory is so popular, and so basic to capitalism, that we take it for granted today.  But in fact it's never really been tried.  Governments have always tried to manipulate markets, and curiously the conservatives who claim to have the most faith in markets are the ones who do the most manipulation.

In the case of oil, there has never been a free market.  All the oil in the world is either controlled or owned outright by a handful of enormously powerful corporations who don't have to compete, they can just fix prices among themselves.  Our government is not able to regulate them, in fact it's vice versa.  It is no coincidence that just now our president, VP, sec'y of state, and about 35 other top officials in the White House come out of the oil industry.  The oil industry gets special subsidies and tax breaks that no other industry gets.

President Clinton gave them 68 million acres of proven oil reserves in the continental USA (which, BTW, were previously owned by the people of the USA).  They drilled exploratory wells and then capped them.  They've wanted ANWR and offshore drilling for decades, and therefore so does any Republican president.  Of course they won't pay for that oil, it will just -belong- to them.

There is no shortage of oil today, no long lines at gas stations like in the 70s.  The cost of production hasn't risen.  The ONLY reason gas is so expensive now is that Bush's war has destabilized the Middle East so there MIGHT be an interruption in the supply some months or years down the road.  This allows speculators to raise the prices of 'futures'.  We could very easily stop this with regulatory action and gas would once again be $2/gallon, but omigod, that would be SOCIALISTIC!

Since there is no real shortage, how do we expect drilling offshore and in ANWR to lower prices?  We don't.  But that's the argument Bush is making and the media are too lazy and to obsequious to give the other side of the story.

Answer 2

Because the gas stations already paid for the gas in their tanks when price was higher so they are going to keep charging the higher price.  Plus the long term outlook for oil prices is still high.

Answer 3

doesn't happen that fast on a decline

if the prices raised, we would pay

Answer 4

when oil prices fall. you'll be lucky to see  pump prices drop anywhere near the % that the oil pices drop..To many hands in the pot and other factors.

Look at beef prices for example. A few years ago if you remember the " mad cow disease scare" . beef prices rose quickly and haven't even gotten close to pre "scare" prices.

Check the prices of tomatoes now after the CDC salmonella fiasco.

Anytime prices rise sharply on any commodity due to outside circumstances, they rarely drop to near thier original price..

And the reason is simple..profit

Answer 5

We're actually lucky that gas hasn't become more expensive.  Oil rose a lot faster than gas the last six months, so if gas doesn't get any higher, we're very lucky!

Answer 6

Oil is at 138 a barrel it was up to 150 a week ago and 138 2 weeks ago gas prices don't change as quickly as oil because gas stations don't buy gas every day.