PLEASE! Tell me why gas is so expensive...

WHERE'S MR WINKY?

I do apologise. I was using in it the slang / colloquial term of phrase. I have edited the original.

Not a bit of it. Snottlebocket's point is to say "I see your comparison-over-time whining and I raise you a comparison-over-space whine."

And why not? It's (almost) like a poor person hearing a rich dude whining about how the green fees of the local golf club have risen recently. Well, boo-fucking-hoo, know what I'm saying? On the international scale, "gas" is not expensive in the US, even now.

But that's exactly what you would expect. The price of oil, over time, in trend terms, should rise faster than the CPI. It's an exhaustible resource, which means its relative scarcity is always going to get worse. This trend does get offset by new oil discoveries, new technologies and productivity improvements, but it can't be offset forever.

Here is a news story I posted some time back on this very issue.

world's top 10 oil companies show record profits as gas prices continue to soar.

Ssshh.

Such as?

Gas prices are going up because as stated its the spring and summer will be here soon as well. More vehicles on the road so the prices always go up. That and petroleum supplies are steadily decreasing every year. Can't do anything about it unfortunately.

Well, to anticipate the "riiiiight" that is surely coming, I don't know the answer.

My speculations:
- oil prices are a small component of the costs of plastics manufacture
- plastics manufacturers are good at hedging by buying the required petroleum products at contractually agreed prices
- the rises we're talking about here have yet to start biting in the manufactured goods sector, but give it time, give it time ....

So true. And we don't have to pay a fee to drive into our cites at a certain hour.

Consider all the shitty plastic stuff they peddle to children to an alarming extent and how much petroleum and energy they cost.

Give it time, give it time ...

*sigh* I know. We're doomed.

It's not too late.

Just watching the news on TV right now and there's a chart on there showing oil prices and Chinese oil imports pretty much moving in lockstep.

Actually, the cost of gasoline isn't necessarily tied to the various setbacks and limitations of production; gas companies determine prices solely on the demand level of consumers. There is obviously a natural constraint to the supply in the absolute capacity of all oil reserves and production capacity, hovever the gas companiess' goal is Return on Investment - They will definitely charge what the market will bear, but by justifying higher oil costs with media reports of limited oil supplies and supply line problems (oil reserves in most countries far exceed the amount needed to weather a small blip due to a supply line failure) the gas companies effectively inflate the price people are willing to pay for their gasoline.

This is not to say that oil costs don't fluctuate or that these costs aren't passed on to the end user, it's just that gas companies raise and lower prices based on driving demand (i.e. holiday weekends,, weekly cycles) and only over the mid- to long-term think about the cost of crude on the world market. The oligopoly (at least here in Canada) that gas companies have set up works very efficiently to reap monopoly rents (profits) in an industry that is on its way out.

... Or at least that's what my Government and Business prof told me in third year..

That's all well and good (and true), but oil is a publicly traded commodity, and the flipside to publicly traded commodities is that people will only pay what they think it is worth before buying something else instead. It's a need vs. cost vs. cost of alternatives thing.

OPEC knows this, which is why it is running essentially wide-open to do what it can to lower prices, within reason. Otherwise, they would cut back production to send prices even higher, so they could make even more money. They know that record-setting prices will eventually turn consumers to conservation. It might take a long time, in the case of America - but I can almost guarantee that people will buy smaller cars and drive less when it costs half of a car payment to fill the tank of a fullsize pickup truck.

Of course companies are in the business of staying in business first and foremost, and highly cyclical industries such as the oil industry have every reason to pursue record profits when market conditions allow them, since lean times that inevitably follow (until now, that is) inflict pain.

Do oil companies game the system and use every excuse in the book to raise prices? Of course.

Is that more than just one component of record-high gasoline prices?

No.