Why doesn't oil cost more?

Question

Everyone (who is buying and not selling oil) is complaning about oil being $140+ a barrel. But think about it... Why doesn't oil cost more? If you have a product for sale, your goal is to charge the maximum amount that people are willing to pay for it. You know you've reached that point when people stop buying it. But with oil, that problem does not exist! We all must buy it. I know we are now looking for alternatives, but for now, it appears that no matter how much they charge, they will sell it. So what is keeping it from jumping to $200 or $250+? And if there are some kind of regulations in place to keep it from jumping that high, then why are they as high as they are now? Also, in the 70's, when oil was very high also, what caused the price to plummet back down very quickly then?

I'm betting that since the "professionals" have mentioned the $150 by July 4th remark, it will probably jump to it, then soon after take a HUGE nosedive back to the $80s.

Answer 1

Although I was driving in the 70s, I don't remember what caused the prices to drop, but I don't think the drop was very dramatic.  When I was in college in the early 70s, you could get gas for 19 or 20 cents a gallon in Springfield MO because of gas wars.  I paid $3.99 today in St. Louis.  I hope you're right about the huge nosedive, because I'm sure not happy putting $55 worth of gas in my car every week, when a few years ago I was putting $50 in every month.