The customer is not willing to pay, more like unwilling necessity of staying afloat.
It doesn't matter
why the customer is willing to pay, only that he is.
Just to make something clear. Anyone selling will try to sell for as high a price possible. Oil, second hand car, house, whatever. When you come to sell you sell for as much as you can.
The oligarchy drive prices up by speculation and manipulation of what you call supply, they make the money they make through a transfer of wealth from middle class to upper wealth.
Certainly. Only understand who has the power to control oil prices; The Saudis and one or two other OPEC countries are the only ones with excess capacity. Everyone else pumps oil as fast as they can.
This is not helpfull and this is why US wealth per person had suffered in the last 40 years and will continue to do so unless true regulation against oligarchy takes place.
How do you tell a sovereign foreign government how much they must invest in their oil fields, and how much oil they must pump?
You can try, but they are going to act in their own interests, not yours. And high oil prices suit Saudi Arabia.
Actually without U.S. involvement in a foreign war the demand for oil in the U.S. went down and the economy boomed...that's public record.
US oil consumption increases over time:
Note that recessions cause drops in oil consumption, but that US oil consumption flatlined from 2004 despite the booming economy.
There are others outside of OPEC but Saudi Arabia tends to dictate production rates based on it's decisions.
There are plenty of oil producers around the world. Most of them produce oil as fast as they sensibly can. Only a few countries, principally Saudi, have been deliberately restricting oil supplies over the last few years.
Uh wrong...the seller sets the price based on supply and consumer demand...the consumer usually has the option to bargain based on quantity except in the case of commodities where the price is based on speculative future value.
You can equally say a buyer pays a price of his own choosing. The truth is that if the seller sets his price too high he doesn't sell, if the buyer makes his offer too low he can't buy.
in the case of gasoline, most of the price at the pump is taxes (state and federal).
In the US? No. The EIA maintain a list of the component cost of gasoline at
http://tonto.eia.doe.gov/oog/info/gdu/gaspump.htmlOver the last 9 years the highest proportion taken by taxes was in December 2001, when gasoline cost $1.09 a gallon and taxes made up 38.7% of the total.
The low point was June and July 2008, when gasoline cost over $4 a gallon and taxes made up less than 10%.
Currently taxes make up about 16% of the cost of gasoline.
You didn't question the laws of economics did you? Take for example luxury items...low demand...little true value...high supply...yet cost remains high.
What luxury products are you talking about? Understand that "value" is what people value a product at, not a measure of usefulness. I may think that a pair of jeans with some designer's name printed on them are no more valuable than any other pair of jeans, but other people disagree. The value then becomes what those other people are prepared to pay.
The system is flawed and doesn't work...if it did GM and Chrysler wouldn't have had to file bankruptcy and Hummer would still be a U.S. owned product...domestic beer wouldn't cost 3 times more than it should and foreign corporations wouldn't own Anheuser Busch or Miller.
Why?
If the U.S. refineries are more efficient and have increased their capacity then gas prices wouldn't fluctuate when one goes down since the rest should be able to handle the output.
Gasoline prices don't fluctuate when one refinery goes down. They did fluctuate in the aftermath of hurricanes Katrina and Rita, which between them closed 23% of US refinery capacity.
The effects of Katrina lasted a long time. Other refineries put off maintenance to keep up production, causing shortages for the next couple of years when they finally had to undergo maintenance.
The only reason demand decreases is by improved gas mileage the actual number of cars on the road has steadily increased...has nothing to do with the price of gas.
Look at the chart I posted above. US oil consumption growth stalled as prices began to climb. US consumption fell heavily in early 2008, before the recession really struck.
When prices are high people reduce consumption.
Hmmm...I thought the oil producing countries dictated the amount of production...and that the prices went up when production was decreased to lower demand.
No, prices drop when consumption decreases, unless production is also decreased.
Look what happened last year. Oil consumption dropped rapidly from the summer, oil fell to less than $40 a barrel. It only climbed back because OPEC cut production so much.
Markets work in a very simple way. If you can't sell, you cut the price until you can. Or you take the product off the market. Doesn't matter if you are selling your old car, your house or a barrel of oil.
So there is no logical reasonable basis for fuel costs to increase when there is an accident at a U.S. refinery
Not if it only affects one refinery. If it means extra safety standards that affect every refinery then of course a single incident could.
Extremely local price affects might be felt from one refinery, too. If you live 1 mile from the refinery and it goes down, it might take a day or 2 to get supplies from another refinery. If your state has some weird gasoline blend mandated by the state government, it might take even longer to produce it at another refinery. But the effect will be purely local.
You begin your argument from a flawed assumption.
True demand for oil did not go up.
Demand for oil increases with economic growth. All those people in China who used to be peasant farmers, and now have cars, increase oil consumption. All the trucks taking supplies and finished goods to and from Chinese factories require oil. So do the construction machines building their cities, and the quarrying and mining machines producing the raw materials.
Economic growth brings higher oil consumption.
Here's a graph of the rate of growth in the world economy, and in the production of oil:
As you can see, oil production tracks economic growth. But look at what happens since the 2001/02 slowdown. Until 2004 oil production kept pace, but with the economy booming it grew only 1% in 2005, 0.5% in 2006 and actually fell in 2007. And that's with world growth stronger than seen over the past 20 years.
