Why is petrol so expensive now?

[Exarch]

hmmm?
today it hit $1.70 a litre
wtf
what's the point of commiting to the iraq war if we cant enjoy cheaper petrol?
why is petrol so expensive now?
why?!
and how can we make it so that it's not (invading other oil rich countries didnt work last time, so we should try something else)

[Axeman]

See one of the other tons of threads around that quite easily explain this answer, but in essence, economics mixed with political unwillingess mixed with less oil output mixed with a whole bunch of from everywere.

[KoS]

When Governor George Walker Bush was inaugurated as President in January 2001, gasoline in the United States was about $1.50 per gallon. Seven years and a war in oil-rich territory later, it's upwards of $4.00 a gallon. Mission Accomplished?

I don't mean to highlight a conspiracy or any extreme-far-left crap, I'm just saying.

[Gelgoog]

When Governor George Walker Bush was inaugurated as President in January 2001, gasoline in the United States was about $1.50 per gallon. Seven years and a war in oil-rich territory later, it's upwards of $4.00 a gallon. Mission Accomplished?

I don't mean to highlight a conspiracy or any extreme-far-left crap, I'm just saying.

or more likely speculation+ higher demand( china, India) + increased costs in drilling/refining + taxation = wala higher prices.

[Yuiis]

or more likely speculation+ higher demand( china, India) + increased costs in drilling/refining + taxation = wala higher prices.

This + the fact that most drilling countries have reached maximum production rates. I think only Qatar and Saudi Arabia can increase production rates, the rest are at their maximum. So we have kind of reached a limit point as to how many people at a time can use petroleum in the planet.

india and china's demand for oil had already been increasing even b4 the iraq war of 2003, and still petrol prices were well below $1 in oz

China's and India's demand back then was much less than it is now. Their economies have been increasing at a rate of 8-10% annualy so I presume that their demands have increased extremely in five or 6 years.

[Oldgamer]

or more likely speculation+ higher demand( china, India) + increased costs in drilling/refining + taxation = wala higher prices.

Not to mention outright federal bans on exploration and drilling, in the United States.

It does give the lie to the notion that Iraq was all about oil, doesn't it, though?

[Joker85]

When Governor George Walker Bush was inaugurated as President in January 2001, gasoline in the United States was about $1.50 per gallon. Seven years and a war in oil-rich territory later, it's upwards of $4.00 a gallon. Mission Accomplished?

I don't mean to highlight a conspiracy or any extreme-far-left crap, I'm just saying.

If you want to go down that route, it was only 2.50 a gallon when the democrats were given control of congress only 2 years ago and is on track to double.

[Freddie]

If you want to go down that route, it was only 2.50 a gallon when the democrats were given control of congress only 2 years ago and is on track to double.

So if you want to take this argument to it’s logical conclusion the price of oil is an economic one not a political one.

BTW if you think petrol is expensive now, next year it's going to be double so I suggest you buy a more economical vehicle.

[Exarch]

india and china's demand for oil had already been increasing even b4 the iraq war of 2003, and still petrol prices were well below $1 in oz

[GrnEyedDvl]

When Governor George Walker Bush was inaugurated as President in January 2001, gasoline in the United States was about $1.50 per gallon. Seven years and a war in oil-rich territory later, it's upwards of $4.00 a gallon. Mission Accomplished?

I don't mean to highlight a conspiracy or any extreme-far-left crap, I'm just saying.

To be fair, that was never the mission.

india and china's demand for oil had already been increasing even b4 the iraq war of 2003, and still petrol prices were well below $1 in oz

Yes it had been increasing, but not nearly as much as it is increasing now. Then throw in all the other crap, such as OPEC which would actually be illegal in the US under the RICOH act, price manipulation.

Lets face it, OPEC is going to squeeze the entire world for everything they can get. In a sense this is good business. After all why sell your product for $1 if you can get $2 for it. The difference with this product is that so many economies are tied to it, and there is no quick way to change that.

Someone mentioned taxes, and we hear on the news here all the time about the oil companies "windfall" profits and the so called price gouging. The part that pisses me off about those comments is that the government actually makes more per gallon than the companies that do the work.

This is a site maintained by the state of California that shows the lie in those comments. This is actually broken down for every single week of the year and includes every cost, including the final gas station profit. You can clearly see that the amount of tax charged per gallon is actually more than the profits of the gas station and the oil company combined.

http://www.energy.ca.gov/gasoline/margins/index.html

For the week of June 16 2008:

Distribution Costs, Mayketing Costs and Profits: .08
Refinery Cost and Profits: .58
Total: .66 per gallon

Now thats not all profit, that is the entire cost of refining passed along to the consumer.

State Underground Storage Tank Fee: .01
State and Local Sales Tax: .34
State Excise Tax: .18
Federal Excise Tax: .18
Total: .71 per gallon

Can anyone name one other product anywhere in the world where the tax collected is more than the total cost to produce the product?

[Exarch]

greendevil
so what ur saying is that petrol is so expensive mainly because of OPEC price fixing and government overtaxation?

[GrnEyedDvl]

greendevil
so what ur saying is that petrol is so expensive mainly because of OPEC price fixing and government overtaxation?

Thats a large part of it, although the supply/demand issue is another huge part. You can never get away from the supply vs demand cycle.

The problem with OPEC is that they influence the supply/demand cycle in unnatural ways. They determine at an annual meeting (sometimes bi-annual) how much each country may produce, and then they set a minimum price agreed to by the member nations as a way to control not only their own economy but others as well. Their own statement on their website even proclaims this:

OPEC's mission is to coordinate and unify the petroleum policies of Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.

Now what that really says is "We are going to control the production so we can squeeze everything we possibly can."

DOHA, Qatar - Oil cartel OPEC decided to cut production by a greater-than-expected 1.2 million barrels a day on Friday, and some members indicated it was open to further cuts.
United Arab Emirates oil minister Mohammed bin Dhaen al-Hamili made the announcement at a news conference after OPEC’s oil ministers held an emergency meeting in the capital of Qatar.

That is direct manipulation of the supply and demand cycle. Usually when supply is low and prices rise, its because production cannot keep up, such as the recent X-Box or iPod events. Economics 101. Falsely restricting production is a different story.


If one company, or even one country, decided to inflate their prices then the market would absorb it, and that company would most likely be out of business fairly soon unless they came down in price. For example if GM added 50% to the cost of every car they sell, they would not be selling many cars as people would just buy Toyota or Ford or whatever. If the big 3 US auto makers got together and fixed the price of a new car and set it far above what the average car price was, then not only would they be out of business but the heads of those companies would also be facing racketeering charges.

OPEC is different though. First off they control 40-45% (depends who you read) of the current world oil production, spread across 13 nations. That is one huge chunk of the world market. But even in the car example above, if 45% of the worlds car makers decided to set prices, the market would still absorb it because the other 55% could make up the shortfall in supply, though there would be a lag while they retooled for greater production.

But in the oil business, most of the rest of the oil producers are already at peak production, they cannot increase. This forces people back into buying from OPEC instead of taking their business elsewhere. There are a few exceptions to this such as the US, which could increase production if the government would get out of the way. Thats another story, but OPEC knows damn well the politicians in the US and other countries are going to throw up roadblocks to increasing production, so they have free reign to do what they wish.

[LoZz]

well firstly americans dont pay anyway near the amount as the rest of the western world, all your doing is catching up (and considering the health problems in american linked to inactivity, less use of the car is a good thing ). 2nd india and china's middle class population is booming, people can now afford cars and as such they are demanding alot of petrol.

[Serious Spamurai]

We pay £1.20-33 around here...

...You're paying £0.86.

[Pontifex Maximus]

hmmm?
today it hit $1.70 a litre

Stop complaining. It's $4.00/gallon here

what's the point of commiting to the iraq war if we cant enjoy cheaper petrol?

Oh, so now you want us to steal oil. We can't. Stealing isn't nice.

why is petrol so expensive now?

I'm sure some blame can be given to OPEC, but oil prices have been on the rise internationally. Supply and demand.

and how can we make it so that it's not (invading other oil rich countries didnt work last time, so we should try something else)

Develop alternate fuel sources, buy a more efficient car, drill in Alaska..

[Chlodwig I.]

Stop complaining. It's $4.00/gallon here

But you know that 1gallon eqauls 4,55 l

so he is paying 7,735$ a Gallon

and in my country its 1,57€ a Litre
which means 7.14 € a Gallon

and 1€ is 1.5$
so in my country we are actually paying
10.71 $ a Gallon

[Pontifex Maximus]

But you know that 1gallon eqauls 4,55 l

so he is paying 7,735$ a Gallon

and in my country its 1,57€ a Litre
which means 7.14 € a Gallon

and 1€ is 1.5$
so in my country we are actually paying
10.71 $ a Gallon

Ohhh he said liters.

I was about to say... 1.70 a gallon seems unreal. (..and it is )

I've got to remember we don't all use the same measurement system.

[Каие]

lol, $1.70 is what 85p? Our petrol is £1.25 which is $2.50.

The reason being demand outstrips supply, and the crude oil is harder to extract meaning more is needed for the oil companies to break even so prices go up.

[Garnier]

It's the economy.

Well as the above poster said, demand is getting higher than supply, naturally you'll have to pay more for the product. And that means driving less, for most of us.

[Ramashan]

If you want to go down that route, it was only 2.50 a gallon when the democrats were given control of congress only 2 years ago and is on track to double.

Since they have had a hard time getting anything through congress without Republican help or a veto from the President, I'd like to see the policies they have enacted which makes them responsible?

Much of it is speculation that 5 years from now they'll be a lot less oil.