Why have big oil companies (with record breaking profits) dumped all their increased costs on the consumer?
I’ll admit I don’t understand the economic influences of gas prices, but it is moderately criminal to me for the average consumers/drivers to have tripled their budget for gas in the last few years while it seems the big oil companies have not taken any of the blows on the chin themselves. I would really like to hear from people highly knowledgeable of the subject.
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I am not highly knowledgeable of the subject, but I think the reason they do this is simply because:
1: They can get away with it.
2: The don’t care about the rest of us.
They can do this because we continue to fuel (haha) the demand for their product. If we were more energy independent, then they’d start taking a hit.
The problem is everyone NEEDS gas for their car, and we haven’t reached a psychological point yet where we cutback on our consumption. We still drive our gas-guzzlers 30 miles to work, still don’t use public transportation unless we literally can’t afford it, and still have a president who’s largest interests are in oil.
You are saying this as though the oil companies are the only ones shifting increased costs to the consumer. Every company does this. My garbage company has raised my rates to cover their increased gas costs. Groceriers have increased due to increased gas costs as well. When ever the minimum wage goes up in order to keep profits where they are businesses that employ minimum wage workers either raise prices or fire people.
And whats so wrong about oil companies making a profit? Other businesses make profits and no one seems to care much. The ‘mom and pop’ coffee shop I go to has raised prices to keep profits where they were and no one is cursing them. It’s just the fact that things are good for the oil companies when it’s bad for everyone else. Think of it this way, if you had a huge amount of money invested in gold say 10 years ago I bet you wouldn’t care too much about the oil prices. Because when the dollar is down, commodities are up. Oil goes up, hurts the dollar, and makes gold spike.
The fact of the matter is there are a few big things that contribute to oil prices, the value of the dollar and supply and demand. Right now the dollar is pretty weak. The economy is down causing people to lose confidence in the dollar. Less people want the dollar so it’s value relative to other currencies goes down. This contributes to the rise in oil prices. This then contributes to rising costs for business in the US causing them to raise prices causing more inflation. This makes the economy worse and up goes oil prices again.
On the oil side of things, demand keeps going up and supply is relatively stagnant. This means the price goes up. If there were substitutes for oil I guarantee you crude oil production would increase causing price to go down to compete against the substitutes (many people think oil companies set the price, that’s not true. Price is controlled by manipulating output). In the early 80’s people were begining to look at a synthetic oil substitute because crude oil was a wopping $35 a barrel, give or take. Crude oil production was spiked and oil dropped to around $8 a barrel, killing the attractiveness of the synthetic.