Right so I know that petrol prices are getting a bit daft. Currently a barrel of oil is something like $140, and is set to possibly reach $250 by next year.

But why? What started it all, and why cant the oil companies just stop rising the price? Is there some kind of vicious cycle or catch-22 that they're stuck in which means they cant do anything about how much their own oil costs?

Best Answer

Well, there is valueless American dollar which drives the price up since it takes more dollars to equal euros or any other currency. There is speculation and there is price gouging driving up the price. The oil companies are making historic profits, not historic sales. This means that they are making higher margins between the cost of good sold and the sales price, also known as gouging.

Also, Bush removed the price caps in place when he came into office which allows Big Oil to charge whatever they want, and he has been increasing the strategic oil reserves which causes a tightening of supplies. It is probably something they agreed to in the secret meeting Cheney had with energy executives that he refuses to discuss or release the minutes to the public.