The High Gas Prices? Aren't they tied to the value of the $.?

If the value of the US Dollar has fallen off a cliff over the last 6 months, and crude oil is priced in dollars. Isn't the governments policy of inflating the US Dollar to save the sub-prime crowd, one of the main reasons, for the rise in the price of gasoline? Why is it "greedy oil companies"?

Ding! Somebody gets it! Although the weakening dollar helps contribute to the high price of oil, there are other reasons. The growing demand in China and India contribute. The withholding of supply coming out of the Middle East. The refusal of congress to allow drilling in ANWR and in coastal waters. The suppression of the use of nuclear power and instead burning of oil. The regulations making it nearly impossible to build new refineries in the US. And the historically cheap price of oil before which kept companies from searching for more. And now we have threatening words from Democratic candidates about how they will treat oil companies if elected. Not a good environment for oil companies to want to search for more knowing that if they find it, they will be screwed anyway. Lots of reasons, but the declining dollar helps.

You're 100% right. Bernanke's rate cuts may help spur investment, but they cause inflation to skyrocket and the dollar to plummit. Additionally, the "economic stimulus package" will have little to no effect on helping the economy.

There are a number of reasons why the price of gas is so high. Since 2002, the value of the dollar has become much weaker and is now near all time lows. This affects the price of commodities because commodity futures are traded primarily on the NYMEX, CBOT and CME, which are American exchanges, thus the prices of these commodities are quoted in U.S. dollars. As a result, when the dollar becomes weaker, it requires more dollars to purchase the same amount of goods.

The dollar becomes weaker during times of instability. During times of instability, people tend to put money into hard assets as a hedge against inflation or for safety. The dollar is also weaker due to the Iraq war: There is instability in the Middle East, thus it costs significantly more per barrel for drilling companies to drill.

Also, there has been a cyclical shortage of raw materials, which has contributed to the high prices of commodities. It is very similar to what happened in the 1980's when oil entered a super-cycle and hit all time highs in a very short period of time, only to fall back to it's original lows. It is important to realize, however, that oil's super peaks, has only lasted a relatively short period of time. Before 9/11 oil was trading at under $30 a barrel and even down to $15 a barrel. This had been occurring for years prior to 9/11.

When oil is trading at below $30 a barrel, on average, oil companies don't make money. This is because it costs on average more then $30 a barrel to bring up each barrel. During these bearish times, a number of oil companies will exit the market simply because it is unsustainable to continue to pump at a price that is cheaper then market rates. As a result, active wells shut down. When oil prices rise, however, this gives competitors more incentive to enter the market because profitability tends to be higher. In time, the market will be filled with competitors and supply will outpace demand and prices will fall once again. It is not a matter of if, it is a matter of when.

On your note of "greedy oil companies". There are three components to the oil industry: upstream, midstream and downstream. When oil prices are high, the upstream segment, A.K.A. the producers will profit significantly. The midstream segment, the transporters (pipeline companies) will break even. Downstream companies, A.K.A. refiners such as Valero will take significant losses because refining margins decrease dramatically if the price of oil gets too high. So when oil prices are high, some oil related companies profit, some break even, and others loose money, depending on the sub-industry.

It is important to note, however, that yes, today large diversified oil companies are making record profits, but for many years when oil was very cheap, under $30 a barrel, the oil companies were actually taking a loss on certain segments of their business. Yet they will continue to operate taking a loss. During good times, profits offset losses, thus the large integrated oil companies can continue operating. Although it may seem like oil companies are greedy, for many years they actually take losses because energy is such a cyclical business.

Because people love to blame "big oil" for their problems instead of the real problem: Americans buying houses they can't afford aka the sub-prime crowd.

It is one of the reasons that the prices are high, but not the only reason.

The price of oil is affected by many factors. Yes, the value of the dollar is a big one. But there's also how much markup the oil companies charge, refinery capacity, and how much the Arab countries decide to produce. Also, oil is traded as a commodity. It's complex and I'm sure there's even more to it than what I've mentioned.

Well, petrol is expensive in Australia at the moment too, and our dollar is quite strong at the moment. It's not AS expensive as you have there, but it's still expensive by our standards, so obviously PART of the reason you have high prices is the oil companies. The rest is probably your dollar.

nobody has a heart for the middle class,not being mean but it is the true anyone who has had a job in business in any area(accounting,tax,public service,investment,marketing and entrepreneurial)knows this.and to be honest if i was in the government i would not care.the get free gas.and gas companies are getting richer and richer i wish i worked for a foreign oil mining company or shell/Exxon or the retail gas stations circle k/racetrack/bp/tps

there is no reason for oil to cost so much.. it's all about money making.... we as consumers have no options whatsoever and they know it.

Because the oil companies are American companies that just reported the biggest three month profit in history (in U.S. dollars).

Right now, the country is spinning into a recession due to home prices and bank liquidity issues. The last thing the country needs is for 'greedy oil companies' (which all accept substantial government subsidies) to create inflation by driving up the cost of all goods.

You are correct that the devaluing of the dollar also is a large contributor to the price increase. Another issue is that the U.S. does not have enough refineries to keep pace with demand. Finally, oil consumption is skyrocketing in china and india.

Clearly the Country is facing a myriad of issues, but the oil companies are piling on just when it is hurting people the most.

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