Gas Prices are Controlled by Supply and Demand

The horror. The horror.

Big Oil did not manipulate U.S. gasoline prices: FTC

WASHINGTON (Reuters) - Big oil companies did not conspire to raise U.S. gasoline prices last summer, as it was high crude oil costs and supply problems that caused the spike in pump prices, government investigators said on Thursday.

The Federal Trade Commission said that about 75 percent of the rise in gasoline prices was due to a seasonal increase in summer driving, higher oil costs and more expensive ethanol that was blended into gasoline. (Demand)

The other 25 percent of the price increase stemmed from lower gasoline production as refiners moved to using ethanol as the main clean-burning fuel additive and lingering damage from hurricanes Katrina and Rita that reduced refining capacity. (Supply)

"Our targeted examination of major refinery outages revealed no evidence that refiners conspired to restrict supply or otherwise violated antitrust laws," the FTC said. "We therefore conclude that further investigation of the nationwide 2006 gasoline price spike is not warranted at this time."

Many lawmakers at the time had accused oil companies, which were raking in billions of dollars in record profits, of overcharging U.S. consumers at the pump.

The FTC said its investigation found the increases in motor fuel prices "were caused by a confluence of factors reflecting the normal operation of the market."

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Supply and Demand

The law of supply and the law of demand are simple, fundamental, and basic principles that serve as the cornerstones of economics. Yet, the politicians, bureaucrats, and various other economic illiterates can’t seem to comprehend them.

Central Planning can't work and will never work. The U.S. Congress will certainly be among the last groups of people to ever recognize this fact.

for further reading: Gas Prices and Price Controls
for further (advanced) reading: The Use of Knowledge in Society by F.A. Hayek