What is a reasonable answer as to why gas prices are so high?

Question

The most common answer I hear these days is supply and demand. But that doesn't seem to justify the fact that oil companies are seeing record profits over the past couple of years. Anyone have a decent explanation? Also, do you think that gas will ever see a drastic drop in price? Or will it keep rising until the day it runs out?

Answer 1

Increase global demand for oil from 2 rapidly growing economies with populations of over 1 billion each. I'm talking about India and China. That is the most simple and most solid answer.

It has nothing to do with speculation.

It isn't going to be solved by domestic drilling (which would take years to start building so it'd do nothing to lower prices)

The only solution is to cut back on consumption, because demand isn't going down, and supply isn't going to increase in the near future.

Answer 2

well my rents own a gas station and what they found out is that the oil companies are making more money..but thats why the prices are going up..they want to make more money so the way they do that is higher the prices.

like the gas station owners, gas delievers, and gas holders dont make any money off of all of this...

Answer 3

it is supply and demand, 1st rule of economics....the world is demanding more oil than the refineries can supply, i don't care that the oil companies are making a killing, its called capitalism!!!!  our newest refinery is like 30 yrs old, our gov't is killin us with the environmental issues.  I don't c gas ever being so called cheap again.  glad when i was 16 and cruzin gas was only bout 50 cent a gallon.

Answer 4

The supply and demand is the oil companies demand of the oil from oil producing countries. These companies are in the oil business and want all the oil to be successful before something stops the production in the countries that produce oil. If a war breaks out, those people will not be going to work to produce oil with bombs going of in the streets etc. The oil companies pass the high cost of getting all the extra oil to the consumer. This is like when a order comes in and the workers get time and a half pay (1&1/2). Even the carriers are working overtime etc. The oil companies are making high profits because there are people who think that they better go to Disney Land before air fares are not affordable for them in the future and it goes on................................ Also because the American dollar is worth less, some countries simple demand more $ for the oil and as long as the euro is worth more we have to pay extra to compare up to a euro.

Answer 5

Gamblers hoping it will go even higher.

Answer 6

Also, inflation which has decreased the dollar at a faster rate in relation to other currencies on an international level.

Answer 7

George W.Bush and family they own  an oil company. Many of congress own stock in them by investing more money in gas it drives oil prices up.Here are some names of companies that sell american fuel only Sunoco,Conoco.Sinclair,BP/Phillips,Hess,... Arco.If you only want to buy american fuel shop these companies.I didn't make up this list I found an inter office memo when my daughter was purchasing a new car it was posted by the salesman so everyone who came in his office(cubicle) whould see it.

Answer 8

greed was a good answer.

it is not supply and demand.

it has a lot to do with the simultaneous crash of the dollar.

but even the Saudis are concerned that gas prices went up too fast.

even the elite power brokers who did meet secretly in Chantilly, VA last month ( a friend of mine was there holding a sign in protest ) let it leak out that they didn't want gas prices too rise as fast as they did.

the most ironic and sardonicly humorous thing was when Congress "confronted" oil company CEOs on April Fool's Day of this year! how appropriate.

anyway, it is all about greed.

btw, if Iraq was about oil then how come we haven't gotten a drop of their oil to American shores?

it was something far more sinister which maybe we will discover one day.

GARKO

http://bestmpg.info

Answer 9

1) because poor countries are trying hard to become rich:

china and india want gas too, and when we go shopping at wal-mart or buy software, we give them dollars to buy it with (this is the supply and demand part).

2) because the US dollar has tanked in value:

if you start a trillion dollar war and cut taxes, no one will want your money. the government has to print more to pay for it, making it worth less. plus, you aren't making anything the world wants.

3) because people are allowed to gamble on prices:

just like craps, except probably less regulated. if you think gas is going up higher, you can place a wager. if you're right, you can put the difference in your tank. right now, they're betting on war with iran. if that happens, iran will respond by shutting off the strait of hormuz, through which 20-40% of the world's oil travels.

4) because there isn't enough competition in the oil industry:

the oil companies used to be one. they were broken up. now, they're closer to becoming one again. with just a few suppliers, you can't shop around (this is the record profits part).

5) because we're addicted to it:

there's an economic term called 'demand elasticity'. without elasticity, they can raise prices and you'll pay, because you're addicted (this is the other part of the record profits part).

gas will only see a drastic drop in price in a global recession, but it's a finite resource that the world is hooked on, so a future of cheap gas is one of the last things i'd count on.

Answer 10

The only reasonable answer: GREED.

Gas will never be $2.00-2.50 a gallon ever again.

Gas will become expensive enough that only the very rich will be able to afford it. And the rest of us will have to find other ways to travel. It's that simple.

Can (or will) people willingly give up their cars and SUV's? I think it will be interesting when this comes to pass.

Answer 11

Oil companies can keep their prices high because of the demand. Think about it. Emerging markets such as China and India are now using more gas, and this increases the demand for it, but the supply simply isn't there.

It could see a drop in price if there comes a time when we use new forms of energy, e.g. solar energy, etc.