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Originally Posted by ken0042
Or here's another look at it. A pipeline breaks down, and everybody is talking saying "fill up your car before prices go up." So people do fill up sooner than normal, and all of a sudden there's a strain on demand because people are trying to get the jump on prices. How can the oil companies get a hold on demand? Raise the prices so people stop filling up.
I'm no economic major, but doesn't that make some sense?
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Yeah, if someone can explain the economics of oil, that would be great.
I've taken a year of economics, and it still makes absolutely no sense to me. It would appear as though the oil companies have total disregard for the basic principles of economics and do not follow the rules that govern economics.
I think it might have something to do with the fact that oil, in a basic context, does not apply to the supply-demand curve because it is a necessity, therefor gauging can and does occur. And then there are things like OPEC that monitor gas prices, and probably align costs so that companies sell oil at a standard rate. Oil companies make huge profits, so they can definately lower prices, but since they all seem to charge the same for oil, there is no competitive advantage.
Does this make sense? Are there any economics majors out there? (Just when I thought they were completely useless
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