| the oil companies are reporting record earnings because of the price rise in oil. they price is not rising due to the record earnings.
lets say the oil company is set to make a 10% profit on a gallon of fuel.
At 2.00 they make 20 cent, at 4.00 they make 40. they doubled their income but did not double their profit margine.
Now that the investors are used to making 40, the price can not go down unless the oil company raises its margin.
so, lets say the price drops back to 2.00 for a couple quarters, to insure profits for the investors, the oil company would have to claim a 20% margin just to maintain investors income.
now, the price starts to climb again on a gallon, you dont think that the oil company is going to reduce their profit margin to help ease the price do you?
the government would have to step in and regulate the profit, and as soon as that happens, investers are going to find other places to put their money, the market would take a huge hit and inflation woudl soar, recession would be certain.
so, My way to fix it, and would not be popular to others, woudl be to subsidise the truckers fuel with dollars currently being spent in foreign aid.
maybe if we hit the world where it hurts right back, they will reduce the cost of a barrel to us. |