Quote:
Originally Posted by Matt13C  People invest in oil futures as a hedge against inflation. Every time the fed cuts rates the chance of inflation rises. As the chance for inflation rises the demand for oil futures increases and this increases the price of a barrel of oil. Since oil is so high already it is essentially a self fulfilling prophecy. Oil companies margins decrease as the costs of the raw material increases. If it was a slight increase they might just ride it out and not pass it on, but a large increase requires a rising in the price of the goods sent to market, refined fuel. Since fuel is almost a need it sparks an increase in prices across numerous industries. |
You realize that the "cost of the raw material" doesn't increase for the oil companies,right? They're the ones pumping it out of the ground... it's still the same cost for them, they just increase the pump price to reflect what the "market says we should charge ourselves." That's why the oil companies are making record profits... because they pay THEMSELVES for the oil.
The only reason oil prices go up is the speculators. The only reason pump prices go up is oil companies using it as a reason to charge more.