Note that the most obvious colluders are OPEC countries which are outside US jurisdiction.
The point I was making is that Some People had prior knowledge of the price rise. If those people are US citizens, etc., there might be some US anti-trust/SEC type violations. But I was really trying to address the issue of how one would go about finding out the real cause of this bizarre jump. (Which based on oil futures, it expected to get worse at least thru June!)
Fun fact from an article on Google News today: All the OPEC countries except the Saudis are producing at max. capacity. “So say there Saudi Prince, what’s behind the recent rise in crude oil prices?” “Look, over there, a rabbit!”
I, along with thousands of other people, knew of the coming increase in the price of oil. It was easy enough to see, with the growth in demand outpacing supply.
From a post made in March of 2003:
The Energy Information Administration’s current Short-Term Energy Outlook tells a continuing story of low inventories, with increased production and acquisition costs.
And another one, from this past February:
The present U.S. working rig count is 1162, and the rig fleet is working at near capacity. I believe there’s actually a couple less seismic crews than there were in February. The world’s tanker fleet is busy, and there’s pressure on that as the single hulled boats will not be able to enter U.S. ports as of 2010.
Iraqi oil will perhaps ease things somewhat as 2005 approaches, but the U.S., with its own growing demand, will be competing with other markets whose demand has historically been relatively low but where their industrial revolution is now underway.
And from just last month:
The subject does seem to come up from time to time.
I’ll agree that that statement is pretty simple. Oil companies are in business to make profits. Nobody controls the price of oil. Nobody controls the oil business. The whole industry is made up of many competing interests that attempt to survive the swings of that industry’s internal markets.
There is the possibility that they are spiking the price now , so they can lower it by memorial day.
As for the price gouging , no one can really be expected to believe the oil corparations that they are not fixing the price to maximise their pofits , but they are doing so in a manner that claims to be competitive.
I live in a small town thats just 50 miles north of Toronto and work in another small town , thats maybe 20 miles from Barrie. If filled up the car at 84.3 cents a liter , or in real dollars , 30 bucks to go from just under half a tank , to full.
Down the street , the price of gas was 93.5 cents a litre ,and entering barrie , one of the local stations prices was 79.5. So looking at this , big oil can claim that province wide ,the price of gas is different enough that there is no fixing.
I’m just not buying the argument that if prices are similar at different stations (Surprise! Surprise!) there must be price fixing, and if they’re different in different places there must be price fixing.
Since they have started freeing up their markets their economy is growing by leaps and bounds. I saw one analyst who attributed $0.20 of the rise to increased demand from China and other fast growing economies that formerly had no use for large amounts of oil because their economies were stagnant. Another $0.20 was attributed to having to re-tool refineries to meet more stringent clean air standards. Additionally, summer is the driving season and gasoline prices always go up.
You also have to consider that gas has to be priced at a level that will allow a refinery or station to buy its next tank or barrel. It does you no good to make a penny profit by selling $1.20 gas at a $1.21 if you are going to have to pay $1.30 to replace it. You would soon be out of business. This is a risk premium and it is probably pretty high right now.
You should expect industry profits to be up because volume is at an all time high. They may still only be making a few cents a gallon but they are selling more gallons.
Finally, the only thing the government can do to lower prices is get out of the way. After the last Gulf War they stepped in and raised gas taxes since everyone was used to paying more anyway (this is the only example of collusion you will find in this tale… politicians colluding to gouge the taxpayers). That is why the price never came back down. They could drop their taxes, they could loosen regulatory requirements or they could allow drilling in ANWR etc… or they could allow us to build Nuclear Power plants. There is nothing else they can do that won’t be more detrimental than helpful.
instead of waiting on profit figures. High profits are to be expected when demand is high. If you are making a penny a gallon and then sell two gallons instead of your usual one then your profits double…right? Plus when there is uncertaintly over supply and demand there is a risk premium involved as I referenced in another post. Thus your method for determining “gouging” is insufficient to the task.
Funny, I didn’t know labor unions sold goods to consumers? Seems like companies have always colluded to pay workers the least amount they could. Guess that’s why there’s minimum wage laws and unions, Thank God!
Labor unions sell labor, and the “consumers” are the companies that hire members of labor unions. Collusion of labor unions occurs when workers go on strike and demand higher wages.
What I gathered from the article was that Saudi Arabia has pushed to raise production quotas just a few months after a decision to cut production quotas. If this effort goes through, and the OPEC nations do increase production, then the current supply situation will see some improvement, though perhaps not much.
First of all, the hype about hybrids is starting to fall flat. Toyota and Honda have really messed up this one. (But I see hybrid taxis in my area now, interesting.)
Also, there is a 100% chance that gas prices will go up just before Memorial Day. That’s been a given in the gas market for years.
Most of the stuff quoted by Ringo was pretty weak when it was posted the first time. It’s still weak. Fact is, the Saudi’s can greatly influence the price of oil by their dominant position within OPEC. The consumers of oil can also affect oil prices by buying more or less, but there is no comparable consumer of oil to match the influence of the Saudis. It’s free market in the “Animal Farm” sense. Some marketers are freer than others. I.e., what they teach you in Business Econ 101 has no relation to the Real World. “Supply and demand” is just a meaningless 3 word phrase. It’s business jargon like “paradigm shift” and “thinking outside the box.”
As to US reserves, refinery capacity, etc. We don’t know the truth. It’s just like California during their mythical energy crisis. We were told one thing, something else entirely was the truth. And since it’s the same industry…
Of course the corportations are setting prices to maximise their profits. Is that gouging in your view? Every company on Earth does this. That’s why they exist.
Not to hijack too far, but in the DC metro area drivers of hybrids get certain breaks, like being able to drive in an HOV lane even if there are no passengers.
• The Saudis, while reigning over OPEC, have very little excess supply (~2MMBOPD) with which to attempt to maintain their meager position of market tugboat, and the rest of OPEC can’t muster much more at all;
• Infrastructure has been hammerred in the last few years and rejuvenating supply has not kept up with increasing ([sub]psssst[/sub] worldwide) demand;
• Inventories are down, demand is up, activity is at a feverish pace for a capital starved theater and we get this:
That’s got to be one of the more absurd notions I’ve run across during this (long) fight against ignorance.
Isn’t it true gas prices ALWAYS go up in the summer during the busy vacation season? “Stick it to them when the need it most”, is somewhat of a travel industry mantra.