Originally Posted by
Leo Graywacz
Almost sounds like the mandated MPG rules for cars. The constantly tell us that we need to save gas, conserve, buy a fuel efficient car. What happens? We use less fuel, but the oil companies expect to make a certain amount of money per yer, no matter what. They boost prices. And another effect is because we use less fuel there are less taxes paid and the road maintenance that comes from these taxes are depleted.
I have noticed that anytime they tell you to save something by reducing use, the price of that something will go up.
If you follow the price of crude oil, you'll see that as demand falls, the price per barrel falls. When the recession hit, the usage of oil declined and the price of a barrel of oil declined. As the economies in the world have recovered, usage of oil has increased and the price of a barrel of oil has increased.
The price of a barrel of oil is also affected by the availability of oil. When there's unrest in the middle east, and fear that one or more sources will be cut off, the price of a barrel of oil increases. OPEC tries to control the availability of oil, and thus maintain a certain price level, but it's been like herding cats. Almost all the members cheat.
While oil companies wish that they had absolute pricing power, they are blown by the winds of the economy and the geopolitical situation. They respond rather than lead as far as pricing goes.
Mike
[The price of gasoline is affected by the price of a barrel of oil but also by refining capacity. Here in California we have spikes in gas prices if something happens to one of the local refineries (such as a fire, or a shutdown for maintenance, etc.). It's all supply and demand.]
Last edited by Mike Henderson; 12-14-2013 at 12:04 AM.
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