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Posted By: warshawlaw

You are confusing prices and costs. Oil COSTS today are not the cause of high gas prices today. Oil COSTS for the oil that has been made into the gasoline you pump today are dictated by the other factors listed and were set long before the gas got to the pump where you buy it. If oil COSTS were the factor driving gas prices, a change in oil costs at the wellhead would affect gas prices some time in the future when that more expensive oil made its way from the wellhead to the gas pump at the 7-11, not today. The reason spot market prices result in immediate changes in gas prices is because the refiners have found it to be profitable to link the two measures, and given their oligopolisitic positioning, vast wealth and lock stock and barrel ownership of the Republican party, have done so without meaningful competition or regulation.

My second point was that because the refiners have artificially tied oil prices to gas prices so that a change in oil price immediately changes gas prices, it is possible for someone in the oil supply chain to manipulate the price of gas today by manipulating the gamblers (er, investors) who participate in the spot market for oil. While the oil industry intended that they be the manipulators, they forgot about OPEC. The unintended consequence of the linkage established is that someone the oil folks don't like (like Saddam or Chavez) who has clout in the oil market could manipulate that market and immediately hammer the US economy. Or, alternatively, could immediately help the US economy if it served their interests to do so, as the Saudis have done repeately at the urging of various US administrations.