Why are gas prices rising?
Crude oil prices aren't the only reason...
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It has become evident that stocks of product are the key variables that determine price
shocks. In other words, stocks are not only the key variable; they are also a strategic variable.
The industry does a miserable job of managing stocks and supplying product from the
consumer point of view. Policymakers have done nothing to force them to do a better job. If
the industry were vigorously competitive, each firm would have to worry a great deal more
about being caught with short supplies or inadequate capacity and they would hesitate to raise
prices for fear of losing sales to competitors. Oil companies do not behave this way because
they have power over price and can control supply. Mergers and acquisitions have created a
concentrated industry in several sections of the country and segments of the industry. The
amount of capacity and stocks and product on hand are no longer dictated by market forces,
they can be manipulated by the oil industry oligopoly to maximize profits.
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