On 18 Aug 2005 at 8:20, Greg Sevart wrote: > In the case of oil, prices have recently been driven NOT by supply and > demand, but by the fears of supply and demand. Easily 50% of the cost > of oil today is a premium built not on actual supply or demand, but > mere speculation and the fear of supply disruptions. Currently, there > is plenty of supply to meet demand, but the margin is slim. > > Economics 101 doesn't (directly) apply here.
Agreed. Same with gasoline prices. The last time that gasoline prices spiked like this was in the Summer of 2000. The price only spiked to around $2.00/gallon, but from a much lower base price. We heard the EXACT same tired old excuses back then that were hearing now. That demand was high, that there was a shortage, that there wasnt enough refining capacity, that refineries had closed down for maintenance/weather/fire, that the EPA requirements of 40 different blends was the problem. In the subsequent quarter, the oil companies and refining companies reported MASSIVE profits. Exxon Mobil's operating income was up 89%, BP Amoco's operating income rose nearly 93% and Texaco's operating income increased by 127%. Refiners also cleaned up: Diamond Shamrock saw earnings increase 310% and Sunoco saw earnings increase by 743%. This sparked an investigation by the Federal Trade Commission, which concluded that the spike in gasoline prices was caused by refiners, WHO HAD ILLEGALLY WITHHELD GASOLINE FROM THE MARKET TO MAXIMIZE PROFITS. All the other excuses had been fraudulently manufactured and propagandized. Too bad there are no regulatory cops on the beat with this administration. Vince
