If Oil Companies Control Prices, Why Do They Ever Lose Money?

If Oil Companies Control Prices, Why Do They Ever Lose Money?

Prices for a gallon of gasoline are posted on the sign of an Exxon gas station Monday, March 7, ... [+] 2022, in the Capitol Hill neighborhood of Washington. (AP Photo/Alex Brandon) With oil prices still over $100 a barrel, one thing is certain. Oil companies are going to make big profits. But misconceptions abound about the connection between high oil prices and high profits. After years of observing the reactions of both the public and our political leaders, it seems like they believe something like the following fictional narrative. They can see ExxonMobil XOM executives sitting around a smoke-filled boardroom, saying "Well, we have the public right where we want them. It's time to jack up the price of gasoline and gouge them while we can. Put a bulletin out to all of our gas stations and let them know. Oh, and call Chevron CVX and Shell and make sure they are on board." I know people believe this, because I have had them repeat every element of this story to me at one time or another. So they rage at the oil companies. They demand that they be held accountable. Politicians call them up to Washington and chastise