Gas prices are spiking, and the masters of spin are shifting blame. “Its the greedy oil companies! Look at their massive profits!” For those who accept things a face value, that will satisfy and anger them. Except I dig deeper. Why are gas prices higher, They are more variables than you think.
First, oil is sold on the world market, like minerals and food. Notice the price of that going up also? Oil is bought with dollars, the value of that is decreasing due to the Federal Reserve’s manipulation. A link to one explanation is here. Then you have supply and demand as another cause, which is found, due to the lag time from buying oil to refine it into product, the price is speculated on its value in the world market. Note when gas fell after the recession began, people couldn’t buy gas like before, demand fell so to get people to start buying more, prices dropped.
Gas prices are determined by price of oil, ethanol(which is government mandated, and has to be shipped by truck. Water gets into the ethanol when it runs through pipe, not cost-effective at all). Refinement and distribution and taxes. When politicians and talking heads scream about multi-billions in profit, keep this in mind, they’re talking about the GROSS INCOME from oil sales. That’s before they use those profits to pay workers, infrastructure upkeep, and investment and expansion. You can see one gas company’s news release here. Note pages 7-12, one reason they made more money, is because they produced more and people bought that product.
Then you have federal and state regulations allowing only certain blends of gas to be sold in that region. Thanks EPA, and all other guilty parties. Then you have taxes, state and federal. And the President talking about raising taxes to drop prices, that’s an instant jump in prices, they’ll pass it to us. Demand will drop, as will prices, but do you think the tax will expire? I’ve never known a tax to expire, only tax cuts. What that really is, is government greed, and an opportunity to seize more of their unearned dollars.
Then you have what the retailers charge, some at cost, some a little more. To summarize.
Cost to get oil out of the ground + dollar value + shipping + refinement and manufacturing + distribution + taxes + retailers + supply and demand=Gas Prices
You have to pay to get the oil from the ground, shipped, turned into gas, distributed via semi-truck(cost of diesel) to gas stations, taxes(government), and what price the gas stations set on the basis of cost and profit margin(they have bills to pay too). And all this is paid for with a dollar who’s value is manipulated by the Federal Reserve and U.S Treasury. Look at all this before you assign blame.