Your body was oily.
Your body was oily.
From what i've read, the oil companies don't make that much profit at all. In fact, their profit margin is only around 8% which is the average for large corporations. They only produce lots of profit because a whole bunch of people use oil for cars, appliances etc. every day.
An approximation of the breakdown of the cost of gas.
Crude Oil: 73%
Originally Posted by Grumpig
Not that they aren't fuckheads that need to lose subsidies, but that's not my point.
Oil companies are in a oligopolistic industry since there are 5 companies which hold the majority market share. So naturally they have market power and a higher barriers of entry to the industry. Also these oligopolies are in heavy competition so if one first has a price set high the others will follow suit in order to avoid the offset of a price war. So naturally prices are staying high because of additional outside conditions which aren't necessarily in their control. For example the increase in the prices of the resources/commodities in which they use for the manufacturing of the product. This is mainly being brought on by the inflation we currently have in the country. While not as grave as the supply shocks of the 70s it is enough to start large changes in price of oil. I'm not sure what the situation is with OPEC though. Also naturally this comes about from easy credit since this also has given the recent spur in investors decisions to invest in commodities which also causes the sharp increase in prices. I won't go into the monetary part since you won't like it
How is Oil market free if.... it's basically monopoly!
OPEC is not free market. Rest of oil producers not better. It's mostly state control like in Mexico and Venezuela or mafia control like in Russia.
What kind of free market is this if major Oil producers in OPEC and openly use oil as weapon to achieve political goals?
Other thing. How gas prices at pumps react so fast to crude oil price?
Do not oil companies have contracts on oil? At list short term like 1 year?
Something very fishy about all this oil business. Sure demands on oil grow and so on other natural resources but I doubt it jump of oil price proportional to demand. I also wandering why Bush administration has not done anything.
Have they build or start building refineries? Or atomic stations? Or drill of shore? Fishy, very fishy