Friday, March 25, 2022

Oil Capitalism.

 The price of gas is high dues to a whole lot of factors, but hardly any related to Government policies.  Oil companies got devastated when the pandemic hit as demand dropped along with prices, devaluing the inventory.  Further the oil they were producing cost more to produce then they could sell it for.

Oil company took a hit on their bottom line and their stock price.  While consumers liked the prices that resulted, it wasn't the price that could sustain the oil company profits.

When the pandemic eased and demand shot up there wasn't enough supply, so prices increased. This is basic economics. This should be self-correcting as oil companies increase production but after getting burnt and unwilling to risk more shutdowns the wells lay idle.  What they were already producing was demanding premium prices and starting up more wells wasn't going to help they're bottom line.

It's not price gouging it is simple economics and profit margins.  where more wells would lead to reduce profits on curent supply.  

That's Capitalism!

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