Wednesday, August 31, 2005

THE PRICEOF GASOLINE: CAN SOMEONE EXPLAIN IT TO ME?

Really, what is the real, logical reason that gasoline prices are so high? The past few days saw terrible destruction by hurricane Katrina, and the media tells me that gasoline prices will skyrocket even higher now because of the loss of oil production facilities in the Gulf. So, in other words, it's supply and demand, right? The supply is less, so the demand is higher, so the price is higher? Sounds simple, but why? Is the gasoline in the pump today a more expensive product than it was last week? If an oil facility is operating today just the same as it was last week, why is it's product more expensive?

The only thing I can think of is that the companies producing the oil have less to sell, so their sales are down, which means their profits are down. Wow, this must be a big hit - just think, the billions of dollars of profit last year will shrink to fewer billions this year. So we need to pay more for the same product in order to keep the producers profits steady.

Greed. I think that's the answer. Please let me know if I'm wrong - I really want to understand this.

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