What would happen if the oil companies dropped their prices?

What if oil was more affordable and available to everyone?





How would that affect transportation?What would happen if the oil companies dropped their prices?
Your first two question are counter to one another.


If oil companies dropped their prices, they would go broke. But the idea that non-guvmint owned oil companies set their own prices is very far from the truth. The market, with the help of guvmint owned oil companies, sets the prices and the non-guv oil companies increase or decrease their activity to match their income. This is the way it has been since the US guvmint quit controlling the price that could be charged for domestic production.


If oil were more affordable (like it has been for several weeks now) then more would be consumed (more cars going more miles) and the excess soon removed from the market. That is the law of supply and demand. The problem of course is that reducing demand for oil and oil products is a rare and unique occurrence. Even now when it appears that supply exceeds demand, it truly hasn't and the price at the pump is already starting to figure that out.





Additional information: Public/private oil companies control less than 15% of the reserves in the ground today. In excess of 85% are in control of state owned companies like all of those belonging to OPEC, the National Oil Co of China, Statoil, etc.


To see just how this is all divided, you can look at or download the world oil/gas review available on BP's website - ref below.What would happen if the oil companies dropped their prices?
Ok, I had this classic example in Econ. The thing is, oil and oil companies are actually a conglomerate. But that is merely beside the point. If, as you say, oil companies would drop their prices, then there would be oil- for everyone at an affordable for some time. However, because that oil is now cheap, it would be taken up more quickly and soon there will be less supply than demand. Now we all know what happens when there is less supply than demand- either prices go up or people start selling for more money (i.e. concert tix). This is the reason why it's hard to mess with market equilibrium. Price ceiling or price floors are not good in the long run because they impact both buyer and seller. Now how that would affect transportation. Well, more people would go more places during cheaper rates. But this is hardly a rosy picture because oil is not a renewable source. In other words, it can only last so long. To make a long answer short, invest in renewable energy. Hope this is of help.
Demand would exceed supply. There is no total monopoly in energy market (though there are OPEC, Gazprom, and other giants like Shell). Oil demand rises constantly (was rising until crisis), while supply has already passed peak and declines.





Price of $20 per barrel would be sweet, though it prohibits most of sub-polar oil, oil from ocean shelves et.c. expensive projects from being extracted (doesn't pays for costs), while encouraging further wasting of energy, while it is cheap.


The only solution (realistic one) - development of lightweight easy to recharge energy cells + nuclear energy. Solar and wind energy is only good for PR. It is extremely expensive AND it requires enormous investment in power storage-transmitting infrastructure (Sun is above one hemisphere, while energy is need 10000 miles away)
More Hummers, more SUV's, more muscle cars, less carpooling, less use of public transportation. We saw it last summer when the country was driving less for the first time, well, ever. At the same time you had to go on a waiting list to buy a Prius, and car dealers couldn't GIVE away their SUV's. Now that gas is cheaper again the market is correcting itself. People have short memories.
blue chips are too valuable, they would never allow that..





as much as i support alternative energy, when i see some stock portfolios my eyes glaze over, as much as i hate the pharmaceutical companies, when i get tips from drug reps and see the prices, it's all i can take to not push the ';buy'; button......it's GREED....it's EVIL..





there just isn't enough for supply.....it's an unreplenishable resource....everyones dependency has to change....you know how it would effect it..we've seen it..it's good for the consumer...at first.
as a share holder in Exxon I would be really pissed off !!





it is the duty of oil companies to charge as much as they can !


That's the American Way
Even better remove all the taxes attached to gasoline.
The answer above is correct. And that, of course, would move the price back up.
We would run out alot quicker and we would have to think of a new fuel resorce.