Re: OT Diesel vs heating oil $

Posted by Bob M on August 31, 2006 at 12:17:38 from (151.190.254.108):

In Reply to: OT Deisel vs heating oil $ posted by MN Bob on August 31, 2006 at 06:16:34:

With the exception of taxes, the cost of production has little bearing on the retail cost of fuel. Pricing rather is simple market economics at work. As long as people continue to buy gas/diesel/heating at today's levels, retail oil prices are gonna hold or continue to rise. There is simply no incentive for OPEC, Big Oil, etc. to do otherwise.

Only if worldwide demand for petroleum-based fuels were to drop (or possibly if massive new domestic supplies discovered and increased refining capacity built) can we ever expect to see prices start to decline.

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Want a non-petroleum example? Look at bottled water:

The product falls free from the sky! Or where I live it can be purchased for something like 80 cents a thousand gallons from the municipal water supply. But people eagerly drop $1.25 into vending machines for 16 OUNCE BOTTLES of the stuff!

As long as people continue to buy it bottled water at this price level, it’s price is gonna hold. Diesel, heating oil and gasoline prices behave no differently.

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