Supply + demand + market speculation of what the supply and demand will be at any given time = price of gasoline.
Oil companies are making record profits right now. But its not from gasoline, it from the price per barrel. Will they be making these profits a year from now? That's where the speculation comes in. Factoring production today with what will production be in the future, the instability in the middle east, etc.
The idea that we (the US) can't affect the global market price if we ramp up production is ludicrous. We are part of the global market, especially on the demand side, and we could on the supply side as well
I am starting to hate this whole 'global market' thing. Every country has no idea how it is ran, and it is terribly inefficient!
Concerning oil, did you know that we have enough oil to supply our energy requirements,( along with coal, natural gas, wind, solar, hydro, nuclear), to power the US? Guess what, we are selling our oil to countries like the Netherlands for them to pay something like 12 USD per gallon of gas. NOTE: those are rough estimates.
So, does this mean Supply/Demand system dominate the determinant of gasoline prices then?
Look at it this way. Gasoline is not the main product in crude oil. Crude oil produces a ton of products. Gasoline isn't the only product that goes up or down. Plexiglass for example has skyrocketed in terms of price. Lots of items that use products of crude oil go up and down, but many of those products have a much higher profit margin so prices can remain steady.
When you understand that gasoline is one of the least profitable products of crude oil that affects every day Americans, then you can see why the price changes. 10 years ago they could have charged $2 a gallon for years. Profit would have been built in. Since the profit margin on gasoline is nil, prices at the stations change constantly. If they raised the price by $.50 a gallon, prices would be very stable for a while until their profit was diminished by higher costs. They could charge a lot more for gasoline but again, that is a byproduct of the main products. They need to sell it as quickly as possible (is does degrade) and the best way of doing that it is to sell it at cost. That is what is currently being done.
Its always easier to blame the president, or blame the bad people. When you research the subject you realize that the price of oil and subsequently the price of gas is an incredibly complex formula, one that is affected more by international forces than domestic ones.
Speculators got burned so bad in 08 they are no longer that big of a driving force.
You win some, you lose some. The idea is to win more than you lose. This is the stock market. They won't run from it but will get smarter. I made a killing in the market in 2008. I was somewhere in the range of 3600% increase in personal investments.
Intial investment was about $750 into those penny stocks. I gave another $1500 to a stock broker and I was comparing my ability to handle my finances against theirs. I lost $700 in 2 years of dealing with them.
Don't know the exact amount because I took losses on other stocks (Citicard failed, Bank of America failed, GM failed, ACAS blah'd out)