The price of a product is determined by the market, not by production cost.
If production cost is greater than what the market will bear then the product is not viable.
Now if their is collusion by all of the oil companies to determine the cost of fuel, then your concerns are valid, however, these concerns should be trumped by the actions of those colluding.
Oil is never produced. It is extracted, but not produced. Fuel is produced from crude however.
Nice job with econ 101 and semantics 201. Refining produces new products,and volume, in that you start out with 42 gallons of crude in a barrel, and end up with 45 gallons of petroleum products.
Commodities do not generally follow strict ecnonomic demand and supply curves, especially fuel and food. That is why they adjust inflation "after" fod and energy." People will cut back, but not eliminate its use all together.
There are two parts to fuel costs at the pump. #1 is the fluctuation in the commodity market (production costs are already factored in). #2 is the cost of related taxes and tarriffs.
There is no instance of collusion, as there is no price fixing. If you increase the cost of the gallon of fuel by 3.3-3.7 cents through taxation, which is easily measured and calculated, the companies WILL pass that on through to the consumer. That is reality. Adding a new fixed cost will get passed on to us. When the gas tax was added at the ditributor level it was passed on to us. Want to tell me how this will actually not be passed onto the consumer?
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