F%^& the oil companys... striaght up price gouging!!!!!!!!!!!!!!
I hear stories about customer going into gas stations and ripping the clerks a new one for how high they have raised the pump prices. Knee jerk ripping on the oil companies isn't much more intelligent than those gas station customers.
The oil companies don't set the price of oil. They sell their oil at market prices, whatever that price happens to be at any given time. Back in the "good old days" in the 90's you may remember there was a time when oil was $12 a barrel and you could fill up your car with gas under a buck a gallon. The oil companies were swimming in red ink then. I don't recall hearing anyone crying for them or holding fundraisers when they weren't making money at those prices. If they set the prices like so many so ignorantly think, believe me they wouldn't have been selling oil at a price that caused them to lose money back then.
In a sense, oil prices aren't much different than housing values or car values. If the market value of your house is $300,000, that's what you are going to try to get for it if you want to sell it. It's not because you are greedy, it's because that is what the price is. If you try to get $350K, you are greedy, if you list it for $250K, you are a sucker because someone else will just scoop it up and resell it for $300K.
Why would an oil company sell its oil for $70 a barrel when the market price is currently $119? Investors and more and more these days, speculators, are buying contracts for oil at $119, so that is what the price is.
Unfortunately markets in recent times have become driven more and more by people interested in making a quick killing. Speculative bubbles. Buy because everyone else is buying and the price is skyrocketing, not because the underlying factors make something a good investment prospect.
Remember the dot com bubble in the late 90s? The housing bubble that just ended? Even muscle cars! Today the bubble is commodities. Energy, metals, food. It's crazy. Look at how high food prices are going up right now. News flash, it ain't Kraft and Con Agra engaged in price gouging! They are getting hurt by the commodity prices too, and blaming them when they raise their prices is nothing short of stupid.
Believe it or not, even some of the refiners like Valero are getting nailed right now, the spread between the price they have to pay for oil and what they can sell the gasoline they refine is not high enough to make a decent profit!
If the government is going to do anything potentially useful here (but when has the government ever done anything useful??), they would be searching for ways to discourage speculation and steer investors more toward making long term investments.
Don't hold your breath though.
If it makes anyone feel better, speculative bubbles always end, usually with a big bang! When the bandwagon everyone has been jumping on hits a pothole, everyone jumps off and scampers like the filthy c ockroaches that they are! Someday this will happen with the commodity bubble. It's not a matter of will it, its a matter of when will it.
In the meantime, this situation sucks and this article makes it sound like it will suck alot worse before it gets better:
http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhyOilCouldHit180DollarsABarrel.aspx
