RSS
April 29, 2008
Gas is High, Why?
Now here's something par for the course: President Bush blames congress for the high price of gas.
On the business side of things, Mark Lacter notes that "Royal Dutch Shell and BP both reported record first-quarter numbers, beating analysts’ expectations. Shell’s net income rose 25 percent to $9.08 billion. Exxon Mobil and Chevron are set to report later this week." (Emphasis added)
In Los Angeles, the average price of a gallon of regular gas is $3.87, but to find it hovering around $4.00 is not a hard expedition. The lowest gas average in the past 12 months was $2.68 at the end of August.
Previously: $7 Gas Coming: Tipping Point for Public Transit, Bicycles & Alternative Cars
Photo by Zach Behrens/LAist
|
Advertisement: LAist Continues Below!
Post a comment (Comment Policy)
The oil companies do *not* set the price of oil. Talking about their profits in a post about price is misleading. They make a lot of money because they invest a LOT of money.
There are lots and lots of factors that go into determining the price including: a weakening U.S. dollar, geopolitical uncertainties around the globe, growing worldwide demand - especially from developing countries, operating reliability concerns, an increasing flow of funds into the commodity markets.
What's causing the marked increase right now is the US$ freefall and the refusal of OPEC to increase production.
Long-term, the best thing for the US consumer is to reduce demand. McCain's proposed moratorium on the 18 cent tax would do exactly the opposite (if it works at all - most likely the price at the pump will go up to compensate and no one will notice a difference.)
The ONLY way to save money on gas long-term is to buy less of it. End of story.
The supply of gas is essentially fixed so price of gas naturally finds itself at the point where it gets sold as fast as it can be produced.
If you cut the taxes on it the price will not change and the oil companies will enjoy the nice extra margin you've just given them. It'd be a tax giveaway to big industry, not the consumer.