Sunday, June 02, 2013

Incredible Gas Price

I was going through the news the other day and I realized that the price of Crude had been dropped. The tumble in China's manufacturing sector had been blamed for it. I don't know what is that these guys are going to use as an excuse to either soar the price or bring it all the way down to the basement!
But then I went out and I was about to pass out! The damn price of gasoline, I realized, had been up, significantly. Just a few weeks back we notice a $0.99 per litre but ¢129.9 and even more than ¢131 is outrageous! 
The Oil market in Alberta is completely messed up. This Bubble Effect which actually is caused as a result of lack of transportation equipment, more specifically pipeline, has caused a significant deficit for the Province and many of the oil and energy companies, I heard, have started laying off many of their employees. There is absolutely nobody who questions these giant companies as while their major product price has gone down, why their other product's price has jumped all the way up. However It could be analyzed this way:
The oil company produces its crude oil which it's total cost of production is, let's say, $10 per barrel and adds overhead costs and profits and sells it for $80 per barrel and compare it to the time that it's sold, for example $110 per barrel. Now this gap, caused by the drop of price of crude, should be compensated by selling the end product, gasoline, with a higher price! Makes sense? If the cost of extraction or transportation drops,  the profit goes up but do the companies ever reduce their price? In most cases no! The price is reduced based on the market demand and stability on different corners of the world. But really what does have, for instance, moving a mobile missile launcher from one end of North Korea to the other end have to do with the price of Crude!? But they use FEAR to control people and drag them from here to there and then drug them with cigarette, alcohol, marijuana and other legal and illegal substances to obtain what they want form them: The maximum profit!
(Photo: A Shell gas station's sign, on 14th St., Calgary, reads ¢129.9 per litre, this morning)

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