Why is the price of fuel rising when the price for a barrel of oil is dropping?

[JMS]

Every company in every industry prices their goods based on supply AND demand. If you are asking for charity from an oil company, i suggest that you not hold your breath and consider purchasing a bicycle.

The point is the oil companies are coming off six years of consistantly record breaking profits every year... Barrel oil prices go up.. the oil companies make more money. Barrel of oil prices go down.. the oil companies make even more money...

The point is their profits are not tied to supply nor demand. Demand is constant because oil is an inelastic commodity. The cost of the supply is variable, but the oil companies have demonstrated their ability to accelerate their profits regardless of the cost.

Their is no competition in the oil industry, and that by definition is a monopoly which is illegal in our marketplace.

[Hubbs]

The point is the oil companies are coming off six years of consistantly record breaking profits every year... Barrel oil prices go up.. the oil companies make more money. Barrel of oil prices go down.. the oil companies make even more money...

The point is their profits are not tied to supply nor demand. Demand is constant because oil is an inelastic commodity. The cost of the supply is variable, but the oil companies have demonstrated their ability to accelerate their profits regardless of the cost.

Not only that, but the oil companies are essentially capable of doing the same thing that OPEC does. The question is whether or not they are - I believe the answer is yes.

[JMS]

Not only that, but the oil companies are essentially capable of doing the same thing that OPEC does. The question is whether or not they are - I believe the answer is yes.

Actually Opec isn't capable of doing jack. OPEC used to control the marketplace back in the 1970's when they oil embargoed us.... Problem is in the 1970's every US consumer went out and purchased a fuel efficient car and the government lowered the speed limit for a half decade to 55 mph. OPEC lost their shirt on that manuver and consuption of oil didn't recover for a decade...

Today OPEC doesn't control the oil market either. There is only one country today who has excess capacity to actually negatively effect cost. That same country is the only one who has had the disipline in the last two decades to cut production and positively effect price... That's Saudi Arabia. Saudi want's oil prices to remain consistant cause their worst case scenario is what was going on last year. Prices spike to 140 $ a barrel and every American consumer buys a fuel efficient car.

Everybody else in OPEC ( Venesuala, Mexico, Iran, etc ) pumps as much as they can because they are living hand to mouth on the oil revenue. Same with Russia.

[LaxBuddy21]

Its what really happens in a free market economy. Competition does not drive prices down on things like fuel and energy which we all need. The companies know we have to buy these things so the big boys get together and agree not to stab each other in the back so that everyone makes a lot of money. They collectively drive the price up. Little guys have no chance to compete because of the vast infrastructure controlled by the big boys collectively and here we all sit at their mercy. This is why I think fuel and energy should be government regulated to keep the prices reasonable. Companies should not be allowed to set their own high prices on things that I cannot choose to go without such as gas and electric.

[JMS]

Its what really happens in a free market economy. Competition does not drive prices down on things like fuel and energy which we all need. The companies know we have to buy these things so the big boys get together and agree not to stab each other in the back so that everyone makes a lot of money. They collectively drive the price up. Little guys have no chance to compete because of the vast infrastructure controlled by the big boys collectively and here we all sit at their mercy. This is why I think fuel and energy should be government regulated to keep the prices reasonable. Companies should not be allowed to set their own high prices on things that I cannot choose to go without such as gas and electric.

Actually you re mixing terms. Monopolies don't exist in a free economy. What we have today is what happens in the presence of Monopolies where competition doesn't exist. Free Markets don't occure naturally in the post industrial age. They have to be regulated and protected else the trusts spring up and dominate and control the market for their own ends.

Certainly you are right when you say it's the role of government to protect the free market by ensuring competition. When competition doesn't exist, it must be introduced by breaking up the trusts and punishing businesses which do calude.

Ideally then the government doesn't need to set prices. If Exxon raises gas prices, Folks can go to Mobil for cheaper gass.. Exxon is thus punished for charging more. Problem we have today is Exxon and Mobil are the same company and the price of gas is not set by the franchise operator like it has been in the past, it's set centraly by th oil company regardless of the cost of the franchise.

[SWFLSkins]

Exxon/Mobil and Shell Oil continue to stimulate themselves at our economies expense?

[ljs]

Is that CostCo, by any chance? I've heard some of those have gas stations.

No, Albertsons. They are owned by Supervalu, who also owns stores all around the nation. For every $50 I spend, I get 5 cents off. And since they are one of my work clients, I get 15% off when I shop. About once a month they do an additional 10% off for employee discounts. I usually spend enough to get 15-20 cents off every couple weeks. I buy everything there. 1-it's cheaper w/ all my discounts, and it helps save on fuel. But, the fuel discount is calculated BEFORE my discount. So when I only spend $100, and the bill w/o discount should have been $150, I get fuel discount based off the $150.

I bought food for Christmas, for our 25 person dinner. The bill would have been $400, but with my discounts it was only $170.

[Darth Tater]

Price and cost have no direct relationship. Price reflects the value you (and the public in general) put on a given scarce resource. If the best use of MY resources is to sell it to you for the value YOU put on it, that is what I will do. If there are better alternatives, that is what I'll do.

[twa]

Just wait for the carbon tax, can't wait to hear ya squeal like pig:D

[Redskins Diehard]

Good to see we are back wondering what is wrong with companies that make a profit. Got sick of talking about the companies that had to have taxpayer money to pay their bills. Whatever happened to good old companies that made just the amount of profit we wanted them to? Why can't every company sell us stuff at a 50% discount?

[81artmonk]

I have an interesting theory. With the auto-makers is peril, Obama and his buddies are basically taking over and telling them what to do.

We all know that he(Obama) wants to push green and enviromental agendas, so in order to do that the larger vehicles have to go. Which they are about to, since the auto-makers (mainly GM) have been told by the administration, that they need to slow production of SUV's in favor of smaller/greener cars, ie hybrids.

Since people don't buy hybrids unless the price of gas rises to or above $4 a gallon,(so say the surveys and polls), IMO the govt is tampering or pressuring oil companies with the prices, in order to get people to buy more hybrids and less SUV's in the future.

[PeterMP]

I'll ask the samething I always ask in these threads. Is there any actual evidence that there is collusion? Is it possible that you have few people looking at the same data and drawing the same conclusion (in this case, we can make more money if we raise prices)?

Does anybody really believe that the Venezualian goverment is colluding with American and British companies?