If you want to see a big reason the economy just can't get out of it's own way, think about how much the average Joe is spending on gas that he could be spending on other things.
EXACTLY! Right now, just on traveling to and from work, I'm spending more each month on gas than I am on: apartment rent, electric bill, food bill, beer bill, everything. There is no single bill that I spend more money on than gas, not even go-fast parts for the Mustang.
If I had an extra one or two hundred bucks each month, you better believe I'd be spending some money.
if you increase the supply, prices will fall ,that is a law of economics, period.
But why in the world would the oil companies want to increase the supply when they're already making a killing at $4.00 a gallon? The demand is [relatively] fixed. So if they increased the supply to the point that that $4.00 gas was only $3.00 gas, they are effectively decreasing their revenue by 25%. Supply and demand economics go out the window when one or the other is inelastic (in this case the demand for oil is VERY inelastic). Therefore, the cost is [mostly] determined by the supply, and when you have the supply controlled by a very small group of people with no competition, they can do whatever they want with the supply to maximize profits, even if it means dropping the supply to the point of $10 a gallon fuel (or whatever).
And I promise, there is no shortage of oil supply.
Trust me, I'm as conservative as anybody; I despise the high NC taxes on gas and I despise most of the ridiculous EPA regulations (and let's not get to talking about Barry....). Regardless, those things are responsible for well less than 25% of the total cost of a gallon of gas. But you are wrong if you think the government is the reason for gas prices being high. It is 100% the speculators (which should be thrown in jail) and the oil companies maximizing profits on our hard earned dollar. Nothing more.
I know some of you would like to kill me for what I am going to say LOL
but this is one of the benefits of studying in the gulf area .... right now I am studying in QATAR,. and the gas cost only 27 CENTS per litre *after they rise the price that used to be around 20 cents only LOL
You guys don't have oil companies holding supplies back in your own country artificially driving the price of gas up. That's the difference.