Oil Prices ⇒

I don't get oil prices. Is there someone out there that can explain them to me? Oil is currently at $27 per barrel. About six months ago, oil was at this price as well, and gas was only 74¢/litre. Today it is 89.9¢/litre? WTF? Have the costs of selling gasoline increased that much in the last 6 months?

The other thing I don't understand is the fluctuation of prices. The gas companies say that price rises and falls with the price of oil. But that only makes sense if the gas company purchases gas everyday! Don't the service stations purchase oil in bulk at a fixed rate? If that is the case then the price only needs to change when they do their weekly/monthly gas purchase, doesn't it? There are, of course, times when demand will drive the prices up (like Labour Day weekend), but those should be short lived. I just don't get it.

This brings me to OPEC. Why do we need an organization to control the price of oil. Why can't it be traded and purchased on the open market? Wouldn't that lead to lower prices more competition? I hate the idea of a shadowy organization controlling the amount of oil that is produced. Companies should be able to produce however much they want, don't you think?

Thoughts?