cavolina wrote:In a normal economic model you are correct. However the oil companies make their own model. The price of oil products is artificially set.
in 40 years of working, I don't recall ever seeing a company faced with such dramatic price increases in materials convert them into such huge profits.
This is just not true. The reason Exxon made record profits is that their raw material cost DID NOT GO UP. If a fisherman is catching lobsters and the price of lobsters triples on the market, the fisherman makes a killing. His costs did not rise, but the price he received did. Like that fisherman, Exxon is pulling up a natural resource.
As for the market for oil products, these markets are very competitive. They might not have been 30 years ago, but they are now. Companies can source their materials from virtually any supplier in the world. Paints, plastics, additives, etc. are all extremely competitive. The only difference is that the demand versus supply curve is somewhat flat over narrow price ranges. Just like with gas prices, people won't change their behaviour until the pain rises enough.
If everything was fixed as you suggest, then rapidly raising prices would be extremely stupid. The best strategy for milking the customer would be to raise prices 5-10% per year. That way, no one screams and everyone pays. The example here is banking fees. The reality is that oil prices were flat for over two decades. WHY WOULD SOMEONE DO THAT IF THEY WEREN'T CONSTRAINED BY THE MARKET?
That said, I am interested in the synopsis of your next chapter. You have a perspective both geographically and chronologically that I'd like to hear.
