Memo To Gas Price Conspiracy Theorists: It’s The Oil Prices

AP Oil at 120

Any time rising gas prices become a story, and the media loves to make it a story, the gas price conspiracy theorists come out of the closet. It’s a conspiracy, we’re told. It’s Big Oil cranking up prices to take windfall profits!

You almost get the idea that gas station owners, after their secret meetings, are rising prices just to screw customers (no doubt while twirling their mustaches).

But what if I told you that gas prices grow and decline consistently in line with oil prices? And that the margin refiners and gas retailers make on a gallon of gas doesn’t really change all that much as prices go up and down?

Put simply, higher gas prices do not mean bigger profits for “Big Oil.” If anything, they probably mean smaller profits as sales volume declines.

fredgraph-600x360

What this illustrates is that the solution for higher gas prices is oil supply. When something happens to make oil prices go up – such as production disruptions, transportation problems or government interference – gas prices go up too.

We can’t do much about some disruptions. We’ll always have storms that take offshore drilling rigs off line. We’ll always have natural disasters that halt oil production. We’ll always have international tensions which impact oil’s global market, and thus prices here in America.

One thing we can do is make sure the government stays out of the way of oil exploration, development, production and refining. That’s the part we can control.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

Related posts

  • headward

    2000-2008 Bush’s fault for any increase in gas prices
    2008-2016 Oil companies

  • PK

    Yeah like OPEC doesn’t control how much oil is pumped and the government doesn’t strangle domestic pumping to keep prices artificially high, to benefit the oil companies. Are you saying there’s no corruption by the oil companies and government? They’re only making record profits. Wow. Thanks for setting the crazies out there strait with your weird assumption that people blame the gas station owners. Anybody with a brain knows how the market is manipulated.

    • http://nofreelunch.areavoices.com/ Kevin Flanagan

      You sound like Bill O’Reilly.

      • PK

        That’s kind of insulting, but not as bad as saying i sound like Glen Beck so i’ll take it. Thanks.

        • http://nofreelunch.areavoices.com/ Kevin Flanagan

          Aren’t you an acolyte in the church of global warming like O’Reilly is?

          • PK

            No sir. Global warming, or climate change as they call it now since the earth isn’t warming, is being used to shut down our industry, moving everything to communist nations where there are no pollution controls what so ever, causing an actual problem. Not a greenhouse effect problem, but a toxic chemicals in the air and water pollution problem that’s killing people slowly. We are being bankrupted and de-industrialized on purpose by the people that own the banks in this study.

            http://www.newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html

            Most of those companies listed actually have interlocking corporate ownerships, so a very small group of people own most of them, mostly royalty. But don’t worry, there’s no conspiracy of a power elite that funds and controls our government servants. Everything is just fine.

          • http://nofreelunch.areavoices.com/ Kevin Flanagan

            You would think the media would have exposed this conspiracy by now.

          • PK

            You mean the Ministry of Truth? They wouldn’t lie about anything so it must not exist.

  • sbark

    Somewhat seasonal as refineries switch over to summer blends of gasoline…..
    and its the number of refineries closing worldwide, which puts demand for finished product squarely in the hands of USA gulf refinery capacity, and then overseas demand is compounded by Obama destroying the dollar which makes it cheaper for other countries to buy refined gas vrs. our own American citizens…….its a taste of what the lose of the Reserve currency status will be like….a small taste, but Obama’s working toward it with another few S&P credit downgrades he’ll get there.

  • http://nofreelunch.areavoices.com/ Kevin Flanagan

    Let’s bring back “the good old days” of gas less Sundays and long lines for gasoline; yeah, that’s the ticket!

    http://americandigest.org/080401-obama-gas-line21.jpg

    • ND in MD

      Not to worry, Obama working on it.

  • borborygmi

    not enough refineries.

  • Lynn Bergman

    On a recent trip from Bismarck to Bemidji via Cassleton and Grand Forks I noticed that every gas station but one was at $3.39; THAT is collusion on a grand scale. The game is to set the minimum price to post each period. Then a few who have high traffic charge a few cents more to confuse us. The wholesale price at the time of delivery has little to do with the posted price.

    • John_Wayne_American

      its not collusion, all those stations buy their gasoline from the same 3 distributors Tesoro, Cenex and Megellen , and those distributors are buying from the same refineries, the only real difference is trucking distance from the distribution hubs and competitive pressure from the station down the street. duh! use you head and think once before you type..

      Damn sometimes I think people that post here spend their days sleeping and their nights listening to coast to coast america so they can communicate with their fellow non-worldlier.

      Good thing Obummer keeps sending those checks out so they have some way to heat the house and eat bon bons and soda pop.

    • tony_o2

      When I worked at a gas station, my manager would drive around town and see what the other stations were charging. He would then adjust our price to match our competitors. Our competitors also did the same thing, thus the prices all over town were pretty much the same. It’s not collusion, it’s called competition. Same way that other retailers tend to charge the same price for the same exact products.

Top