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by Stonney on April 12th, 2007

Stonney

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Why are gas prices so high and the oil companies allowed to continue making record profits and paying their upper level management ridiculous incomes.

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  • by geek860 on April 12th, 2007

    geek860

    There's no regulation. Gas prices will be whatever the market can bear. Profits are enormous, yes, and CEOs and other high-level execs pull in huge incomes. They get that money for 'doing a good job' (AKA raising the prices as the little guys do all the work).

    I saw a graph on the news that showed positive economic profits (if you didn't take economics you may not follow me here) being made in the oil industry. However, not many new firms are entering because there's a lot of barriers to entry. In addition, there's a fair bit of collusion (legal collusion) that keeps prices high. As long as the oil companies get along with eachother they can all make huge profits. As soon as one company lowers their prices or decides to actually treat consumers like humans, there is a price war and we win. However, when things stabalize again the price goes up and they once again keep winning. As long as people need oil, there will be companies willing to charge them for it.

    Oil prices have gone up, yes, but (in Canada at least) no new refineries have been built in decades. The # of gas stations, etc. has remained relatively constant so their operating costs are pretty much the same. However, despite this, a marginal increase in oil prices has led to a massive increase in fuel prices - it's like a license to print money.

    Go electric, walk, bike, or get used to paying through the nose.

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