Quick Thoughts: Oil and Gas Prices

The vast amount of oil is transported via ship. At any given moment there are dozens of ships on the seas transporting the crude to refineries. It takes these ships from days to weeks to go from their points of origin (North Sea, Africa/Middle East, South America) to America for production. It takes days to refine the raw crude into various oil and gas products, and then ship it via tanker truck to all regions of the US.

Yet when something happens to a pipeline in Saudi Arabia or a coup happens in Venezuela, the price of gas changes immediately (the same day or next day, at the latest) at the pump, even though it will take a minimum of a week, and more like two weeks, before the interruption the issue caused would actually reach oil refineries and the gas pump in America. When the issue is resolved, it takes weeks and sometimes months before the price of gas declines back to pre-issue levels as the flow of oil resumes unabated.

And, of course, this doesn't even mention the home-source, Canadian, and Mexican oil that also is part of the processes and is not interrupted by whatever "hiccup" is "causing" the gas prices to go up.

Add to this the fact that the oil companies continue to make record profits even during a world-wide economic recession and it is no wonder that people think there is some form of collusion going on.

How stupid do they think we are?

The gas companies could, today, right now, change the price of gas to $1 per gallon (and equivalent in litres) and still make vast profits. They have learned that they can charge what they want and no one will question them and they can make world-shattering profits, so why wouldn't they?