Do hurricanes really raise the price of gas or is it just price gouging?
Do hurricanes really raise the price of gasoline or is it just a reason for price gouging? I believe that it is a reason to simply raise prices and take advantage of a natural disaster. When the gas companies see a natural disaster coming and they have scared Americans they know that they can jack up prices and take advantage of everyone. The hurricanes hardly affected any oil refineries at all. Therefore the gas prices should not have hiked like they did. I think it is interesting that after Katrina the prices went up, but after Rita the prices stayed the same. The gas hikes are because of the greed of the oil companies and nothing else.
7 comments:
Yeah oil companies may be greedy but I think there are other factors involved. For example the refineries may not be affected but the people that work on them had to be evacuated. Also the industry is growing right now, so there is a big demand for new parts and equipment. So even if the damages are minor there is already such a demand for parts it takes a while to recieve them. I believe the oil companies can justify the high prices. Besides high gas prices are good for my job after graduation
Yeah, I know that everyone believes that these oil companies are out to get us, but there is nothing that they can do when the hurricane is headed for their refineries. It is something that they feel is necessary and understandable to do when they raise gas prices when their refineries are destroyed in a hurricane.
With the limited amount of resources that we have, oil companies must take full advantage of the nation when a natural disaster occurs. The prices were even raising over the summer just because of the fact that we are very scarce for oil. They do have the upperhand when natural disasters hit, but this is just because these refinerys wont be around very much longer and they must strike while the iron is hot.
People have to realize that these prices are not set solely by the major oil companies. Gas, natural gas, oil and the others are all traded on the market. Oil is bought in futures. It is this future buing that causes these price rises. When the buyers see something coming that could disrupt production they freak out. They think that the supply and demand curves are going to tighten way up and suspect a possible shortage. This causes them to trade their shares at these ridiculous prices regardless of what really happens. That is why oil prices sky rocket with the rumor of a hurricane, but drop just as quickly when the hurricane did not pan out to be as bad as they thought. Gas is also traded on the market. Recently it has been trading around 2 dollars or maybe 10 to 20 cents more. This price sets the foundation for the price we see at the pumps. Here in the midwest, we see higher prices because, of the longer refining process. Also there are taxes that are imposed on top of the traded price. But I don't think that the majors are causing the gouging. When they give their listing price, it usually will include a transportation fee, which still allows them to make money. But where the real gouging occurs is when you buy from the smaller businesses. These businesses typically buy their gas from a second transporter. This guy has already bought his gas from the original tanker, so he has to increase his deliver price to the station in order to cover his costs. Here is where a lot of the gouging occurs. Sure, there was some rediculous prices in the last month. But most of the station owners said that it was merely to scare off people from buying gas because they were running short on supply.
I feel oil companies have raised gas prices for the fact that resources are already scarce, and that when a natural disaster happens, it is more leverage for these companies to make the move toward higher prices. Gas prices have increased over the past several years, yet without a great disaster. These oil companies look for the chance to get the prices higher. This past summer, the prices were higher due to the pipelines being immobilized, these companies know how to take advantage of situations and when in their type of business, it is the best thing for them to do.
I would agree with Kyle. The price of gas should really be coming down now that the oil refineries are working again and weren't really hurt in the first place. I believe oil companies are taking advantage of the consumers yet no one is really doing anything about this. I am surprised the government hasn't stepped in to try and help the public because they have helped to control oil prices in the past. Something really needs to be done about the oil prices in the United States.
I believe that this is a fairly simple answer, but to me, it makes sense. When something happens to make the production of a good (i.e. gasoline) stop, delay, etc., the obvious answer is to up the price of the good. If I owned a business that sold dolls, and I knew that there was a possibility that a huge shipment of dolls wouldn't be shipping in for a while, I would increase the prices of the dolls I currently have to make up for the loss (this would be a better analogy if dolls were needed by millions of Americans every day - but you get my drift). I don't think that the gasoline industry is trying to take advantage of the hurricane or take advantage of the American public - they are just doing what any other business/industry would do in the same position.
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