Why Does the Cost of Crude Oil rise?
@mythociate (21437)
Oklahoma City, Oklahoma
June 16, 2022 2:08pm CST
I 'ask The Internet' that question, and the best answer I get is (I'll summarize) 'Because that's what they say the price is' ("they" being the crude oil 'drillers' (or whatever they're called ... miners? fishermen?))
I guess THIS is where 'The Law of Demand' comes in. The drillers (or rather 'their executives') have to pay many costs--land, equipment & employment, mainly--and above that can only charge what they think the people will pay.
What changes those costs? And are there costs I'm not thinking of?
7 people like this
6 responses
@Vikingswest1 (6305)
• United States
16 Jun 22
Lack of competition.
When fewer nations export crude, the nations that export can control the prices.
When the US was exporting, the price fell drastically with other exporters falling in line.
Now that China, Russia and OPEC control exports, they are free to manipulate the cost by producing less oil.
If production is down and demand is high, the value of the exports increases.
With little competition, those few exporters can control the price of a barrel. This also translates into across the board higher prices on literally every product and out of control inflation.
If the US were to revert to policies in place under the previous Administration, it would force other producers to lower the price for their exports.
Biden could offer immediate relief but that would be admitting that Trump had a sound policy.
5 people like this
@dgobucks226 (34586)
•
18 Jun 22
Perfectly explained. Basic economics of supply and demand. Yep, Biden's and the Green New Dealers attempt at eliminating the oil industry when the country is not yet ready for complete alternative energy sources. A plan not well thought out by the administration who seems to be incapable of thinking with their brains!
4 people like this
@Plethos (13560)
• United States
18 Jun 22
@dgobucks226 - you cant force change. it has to change itself at its pace of development. people are impatient at times when charging thier phones or tablets, imagine that with a car.
3 people like this
@RebeccasFarm (87041)
• United States
18 Jun 22
I think Vikings answer is very good and Biden could do something.
3 people like this
@mythociate (21437)
• Oklahoma City, Oklahoma
18 Jun 22
Like what?
Didn't he have plans to increase production in the US?
2 people like this
@mythociate (21437)
• Oklahoma City, Oklahoma
19 Jun 22
@dgobucks226 So it's okay if the world burns as long as we've all got positive balances in the bank?
1 person likes this
@dgobucks226 (34586)
•
18 Jun 22
@mythociate A political gimmick to offset his sinking poll numbers. Inflationary food prices caused by Biden's oil policies and high gas prices are the countries top priority not getting an electric vehicle or using solar and wind to heat and power their homes.
2 people like this
@snowy22315 (171967)
• United States
22 Jun 22
I think there is a multitude of reasons honestly.
1 person likes this
@snowy22315 (171967)
• United States
22 Jun 22
@mythociate I couldn't even guess honestly. I would say the exhorbitant profits of oil companies has a lot to do with it though.
1 person likes this
@mythociate (21437)
• Oklahoma City, Oklahoma
23 Jun 22
@snowy22315 Don't the oil-companies ("refineries," I guess that is) 'exhorb' those profits FROM US? and I guess--since WE are using 'so much more oil'--they've got to GET more through more hard work.
Did prices FALL any during the months we were all quarantined?
1 person likes this
@dgobucks226 (34586)
•
18 Jun 22
If you're looking for a truthful and accurate answer from the internet you will not find one. Almost any site you search is controlled by left-wingers with an agenda to defend and promote the current administration's policies by using misinformation and bending the facts.
Read Vikings answer which provides a rationale look at why prices are higher. Trump predicted over $5 gas when he debated Biden and the current President said he was going to phase out the gas/oil industry. Seems he is more than right as prices have hit the $7 mark in some parts of the country. Sadly, the people now running the country are not rational thinking people.
2 people like this
@mythociate (21437)
• Oklahoma City, Oklahoma
19 Jun 22
So what's the solution? "Drill, baby, Drill!"?
1 person likes this
@porwest (78755)
• United States
23 Jun 22
I wanted to comment, but I believe @Vikingswest1 got it down pat here.
2 people like this
@mythociate (21437)
• Oklahoma City, Oklahoma
23 Jun 22
Did I say @Vikingswest1 was wrong?
1 person likes this
@mythociate (21437)
• Oklahoma City, Oklahoma
24 Jun 22
@porwest I guess I'm asking 'what is YOU interpretation of that answer?' rather than 'whose answer do you think is best?'
1 person likes this
@ihasaquestion (8274)
•
16 Jun 22
So, this is something like what we have learnt in school for supply and demand.
1 person likes this
@mythociate (21437)
• Oklahoma City, Oklahoma
17 Jun 22
Maybe, but is it really? I'm thinking that--when you get out of school--you learn that there are a lot more factors than supply & demand ... don't you think?
@ihasaquestion (8274)
•
17 Jun 22
@mythociate Yes, there's economics and political science too. But of course, it is always more than supply and demand.
1 person likes this
