2 things. ONe is the LAW of supply and demand. For those who have studied economics, they will know that very few things in Economics is concrete, and even fewer - like this one - are LAWS - i.e. no longer subject to debate. Quite simply, the demand has sky rocketed, the supply has stagnated. prices had to go up.

Now why has the supply stagnated? Here we have 2 causes. One is Opec. They like the price, and so they are resistant to increase supply when they see supply as being finite, and the way to make a lot of money is to sell every drop at a very high price (they are correct, except they fail to see competitors - alternative energy - entering the market - their ostrich syndrome).

The second is the failure of other nations, specifically the much touted "first world" to open up new fields. And then they question becomes why?

The answer can be found in the halls of congress yesterday. I will leave you to check out what happened in congress yesterday to see who the other villans are.

The effect is that those who want alternatives (and I think democrats do - they just are too duplicitous to admit it) are rejoicing. They are getting their wish. Oil companies see their monopoly disappearing - and are scrambling to get into other markets while they have the cash flow to do it (See ALtria, GE, and Exxon Mobile non core investments for wise strategies).

Coming out and saying "I like HIgh gas prices" is a very unpopular stand, and yet Obama has indicated it, and others have stated it. It fits their agenda. I respect them for their honesty. And then there are those that say the opposite, while silently jumping for joy at the high prices (see previous for reason). And they are basically pond scum. See Reid nsd Pelosi.

IN the end, the Oil companies may be getting a small kick, but they see the end coming because they cannot control the prices. The democrats get to lie, and get a scapegoat, and get to hide! So who is really benefitting? After all, they are going to tax that profit away from the oil companies.

And the winner is? The democrats. The have partial control of prices by preventing drilling in known good fields. And Opec because at least they are honest in their greed if very short sighted.

Don’t you think the oil companies like the prices? And don’t you think the oil companies are doing the same thing--resistant to increase supply?

By the way, please explain to Paladin77 that the way to make a lot of money is to sell every drop at a very high price, he doesn’t appear to understand.

That would be true if there was no alternative (and today, August 3, 2008 there is none), but as we know, that will not always be the case. Oil companies - the ones that do not diversify, will go the way of the buggy whip manufacturers. That was the second shoe dropping.



IN retail, we use to have a joke. We would sell below cost and make it up in volume. SO of course there is a floor. But the reason that WalMart does not jack up its prices when it has an effective monopoly is that they do not want competitors entering the market. So it is with oil companies. They know the price is too high (in 20 years, it may be normal, but not in 2008). SO they want a high price, but they cannot set it as if Exxon tried, BP would out sell them. Now they could collude, but in the last 30+ years, after countless investigations (from a congress that likes to investigate not when there is evidence of a crime, but just the hint of it), none was ever found. For now, Oil distribution is a competitive market that obeys the supply and demand law. They can no more arbitrarily jack up the price than McDonalds can on burgers. They will sell at a high price when the market allows them to. But note the verb - allow. They do not control, they react.

Once supply exceeds demand, you will see them competing to sell all their wares while others are stuck with theirs. How? Lower prices. They are reacting, not dictating. Everyone would love to make a million dollars an hour. Mot never will, because they do not control the market.

Because you keep ignoring the point that the oil companies profits are fixed by congress. they make 9.9 cents per gallon profit. In order to buy more oil to sell they charge enough per gallon to pay for that oil and refining costs. That is the cost of doing business. They might earn a billion dollars but the profit is less than earnings. The oil industry or I should say the gasoline industry has always been set up on volume sales rather than the price. The only way to make more money is to sell more gasoline. American oil companies are restricted by federal law how much they can earn as profit. Sure they can fudge a few million here and there but not much. Because if the regulators drop in and do an audit they could lose their business all together.

Exxon had record earnings the last quarter, Wall Street was unimpressed because they did not hit what was expected as far as profit and their stock took a dive. Remember that stock holders own the oil companies. The stock is only valuable when they show sustained profits in order to pay high dividends. Low profits means low dividends meaning the stock is not worth as much. My mother owned Atlantic Richfield and when she died it was passed on to me. a thousand dollars every three months give or take is what I get from them. So I get 4 grand a year in dividends.

Don’t be fooled by the numbers they throw at you in the media. Once the money is earned, then it has to be paid out. First on the list is the money needed to buy more oil to turn into gas. Next they have to pay salaries from the fat cat executives to the lowly guy on the rig drilling oil to the trucker shipping the stuff all over the country. More gets spent on R&D and R&R and new acquisitions such as land leases or rent on land leases, and what is left over are taxes and dividends. The companies pay taxes and what is left is divided up between the stock holders and sent out in quarterly checks. Now if the price of a barrel of oil goes up there is less profit. When the price of oil goes down there is more profit. To stop the greedy oil companies from getting rich the congress enacted the windfall profits tax. What that means is that the difference in the price of a barrel of oil when it goes down is given to the federal government instead of the stock holder.

The reason why gas is at about 4 dollars a gallon is because people are betting on the futures market that the price will go up on a barrel of oil and the price is fixed by the betters also known as speculators. When they think they have gotten all that they can they will start betting the price will go down and the price of oil will go down. The oil companies don’t set this price the speculators do. The press and the liberals want you to focus their anger at the oil companies so they hype their earnings not their profits. Most people don’t know the difference so earnings and profits are the same to them.



You don’t seem to comprehend what was written by the good Dr.
You have bought into the lie that big oil makes more money on higher prices. You fail to understand that the winners are the owners of the land where the oil is pulled out of. The speculators set the price paid to the owners of the oil. In this case little of it is pumped out of American soil so the American oil companies have to buy it from, Canada, Mexico, Venezuela, and OPEC at the set price. You yourself said 70% of oil Americans use comes from other countries.

The conservatives want the oil to be drilled in America so the American oil companies can make some money and as they do the price of oil will drop because more of what we were buying from other nations we will be getting domestically. This will increase the world supply and the speculators will bet the price will go down and set the price of oil lower. Proof of this was when the President dropped the presidential ban on off shore drilling. Within minutes the price of oil dropped ten dollars. When the Congress announced it was opposed to doing the same thing the price went back up.

I'd like very much to sell you the Brooklyn Bridge.

Okay, how much?   

I guess the financial news is not high on your list of things to do. with my business I have to keep an ear to it from time to time. In this case I got the news from that extreme right wing news organization called NPR on my way to work and researched it when Igot home.

You might be in the market - he is right.

Besides, this is just a red herring. Are we to cap Sales and profits at some arbitrary level set in antiquity? The simple dynamics of A - Inflation, and B- a growing economy means that profits are going to continue to set records, or the company is going to fail. This mysticism about record profits is just another talking point of the socialist that want people to believe it is unprecedented, when it fact it is a normal course of events. It is just another boogeyman created by the clowns that dont know what the hell they are talking about.

No one here is denying that to make a lot of money you want to sell every drop at a very high price, the problem is that you can only sell something for a price people are willing to pay. As you have seen once gas prices hit $4/gallon American demand for gas started dropping off pretty quick as more and more people turned to public transit, cutting out the extra trips out, etc to cut down on the gas they used. This drop in demand translates to the American oil/gas companies losing money (profit not necessarily earnings).

Good point! You can charge any price you want in a market economy. But then the buyers also have the right not to pay that price.

I want to charge $1,000,000 for an hour of my labor. So far, no one, not even the oil companies, have been willing to pay me my desired rate.

How can the oil companies make more money by drilling more oil in America since according to you their profits are fixed by congress at 9.9 cents per gallon?

How will drilling more oil in America reduce the price of oil when, according to Dr. Guy, Opec and other nations control the price of oil (supply and demand based on a world market)?

How can the oil companies control the world’s oil supply?

You are cofusing oil with gas. Their profits on gas are fixed at 9.9 cents per gallon but if they don't have to buy as much oil from other countries to produce that gas then they can keep more money for themselves hence increasing their overall profit.



The reason that OPEC and other nations control the price of oil is because they have a majority of the supply. If America had a larger supply then the price would go down due to the law of supply and demand.



If the oil companies pump less oil out of the ground they are affecting the amount of supply that is available to consumers thereby affecting the price of oil since the demand will remain relatively constant day to day.

You talk as if there is only one oil company or that all they get along enough to rig prices for each other.

Conspiracy theories are entertaining and all, but, oil is priced no differently than any other product or service. The price the buyers are willing to pay... period. As long as the buyers of crude are willing to pay these prices, and are able to sell if for what the price they are getting, gasoline and other petroleum products will continue to cost as they do.

Actually, he was just answering a theoretical question. If the oil companies conspired, they could. But has been proven time and time again, they have not. In addition, when there are many sources (companies) the urge to cheat is great (see OPEC when the SUpply was higher than demand).

Exactly, everytime the powers that be in OPEC tried to rig prices, one or two members "cheated" and the whole conspiracy fell apart. They couldn't prevent the price of a barrel to go below $20 when it has anymore than they can force it to stay over $120 when the market forces crude prices down.

Short term - until the cheating starts - they can and have. in the 70s and today.