This is the inevitable drop before they jack up prices again. My guess is oil prices will be the lowest oh right about late october.(hmm...wonder why that is) Then its the "holiday driving season" haha. I'm eagerly looking forward to paying $5-6 a gallon. lol.
Who is they? Why do people constantly think that the entire oil industry is based off of collusion? Prices go up during the "holiday driving season" because demand increases. Demand increases because more people fly or drive during that time. Let's assume that there is a constant supply of oil, this is just hypothetical since there are always fluctuations in supply, if there are more people who want the same amount of oil, prices will go up as the resources becomes more scarce. When less people want the same amount of oil, prices will go down.
Collusion, even within cartels like OPEC, usually doesn't work. Even OPEC found that, when oil prices were high, poorer OPEC nations, like Angola or Nigeria, would just produce more oil beyond their quota in order to get extra cash leading to a drop in world prices. If the rise in oil prices was just because of collusion between greedy oil executives wouldn't that lead one group of greedy oil executives, let's say ConocoPhillips, to sell cheaper oil below the prices set by their cartel in order to gain more profits for themselves and drive up their share price? This would lead the others to lower their prices to keep up and the collusion would collapse. There are very few true cartels and very little collusion in the world because of these problems, people are greedy and therefore will break with their partners if there is additional profit involved.
Well Oil companies can affect oil prices by deciding when to keep refineries open and when to maintain them. They only affect the prices at the margins of course, but enough to fool us short-term thinking idiots. I will bet you anything oil prices, at least at the pump, will be lowest just before the election.
