Huggy asked in Politics & GovernmentPolitics · 1 decade ago

Would nationalizing oil companies lower fuel prices?

Update:

If so, how?

23 Answers

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  • 1 decade ago
    Best answer

    The answer to your question in no. The reason for the rising cost of oil (US$135/barrel) is because of reduced production in the world. Political instability in the Niger River Delta has disrupted production there, the 2003 Invasion of Iraq devastated Iraqi oil production, the fear of an American invasion of Iran has caused OPEC to cut back on production, and the cooling of relations between the U.S. and the Chavez regime in Venezuela has further contributed to this near perfect storm.

    Nationalizing the oil industry would not increase production since OPEC, an international oil cartel that the U.S. is not a member of, controls the bulk of the world's oil production. Price is dictated by supply versus demand. Furthermore, the United States already has the cheapest gas price in the developed world as the government imposes as $0.36/gallon tax on it compared to European figures of $3-$4/gallon.

    The U.S. government has already done plenty to keep prices below the world averages. Nationalizing the oil companies would not do much more.

  • jehen
    Lv 7
    1 decade ago

    No. The oil companies do not set fuel prices. Prices are set on daily commodity exchange markets.

    The oil companies do not decide how much to produce (producing more would lower prices). That decision is made by the governments of the producer nations (in other words, they have already nationalized the oil industry - but then they are the ones with the oil)

    American oil companies are making nice profits - because their oil is selling at the same price as everybody else's oil. But American oil is just 12% of world output. Nationalizing American oil companies changes none of the factors that determine price. None.

  • Anonymous
    1 decade ago

    As far as anybody knows, the oil companies aren't the source of the problem;although, they do benefit from the problem.

    The problem is nobody has been tracking capital flows into commodity based derrivatives over electronic exchanges because of a couple of bills that became law in 2000 and 2006, so saying a lot more about what is going on is difficult beyond pointing out that investment flows are creating trade flows that mirror scarcity, but they don't reflect the underlying reality of the actual supply and demand for particular commodities like oil.

    Remember back in 2001 when Enron was doing ricochet trades and such to create false scarcity and push up spot market energy prices?

    You heard a lot of people claiming we needed to drill in ANWR, that they needed more energy plants in California, and so on, and meanwhile the energy providers were saying they weren't seeing increased demands in line with what was happening on the spot market.

    The same thing is happening now with oil prices on the commoditites markets for the exact same reason for the most part. Probably at least half the price of oil is being driven by pure speculation.

    -----------------

    “There has been no shortage and inventories of crude oil and products have continued to rise. The increase in prices has not been driven by supply and demand.” Lord Browne, Group Chief Executive of BP, The Daily Telegraph, May 6, 2006 .

    “There has been no shortage and inventories of crude oil and products have continued to rise. The increase in prices has not been driven by supply and demand.” Lord Browne, Group Chief Executive of BP, The Daily Telegraph, May 6, 2006 .

    “We believe the hike in speculative positions has been a key driver for the latest surge in commodity prices.” Citigroup report on prices of U.S. commodities, May 5, 2006 .

    Oil executives told Congress that speculation might be responsible for half the current cost of oil. Leaders from five top companies agreed that current supply and demand levels should place the price near $55 a barrel, instead of the roughly $100 a barrel in recent days.” As reported by Lisa Desjardins, CNN Radio, April 3, 2008 .

    “All Americans feel the pain of $100-a-barrel oil, and it's not just at the pump. The situation is not sustainable. It's time to take urgent action.” Peter Robertson, Vice Chairman of Chevron, Hearing Before the Senate Committee, April 1, 2008 .

  • Anonymous
    1 decade ago

    Yes they could regulate the prices ,we already conjure up our own money why not.I think a better idea would to elimanate so many counties in each state so the Trillions of dollars could be used instead of being held for years ans losing its value to to inflation.

    Nationalizing oil companies would be like in enforcing socialism.Maybe the goverement should start there own projects so we could rely less of foreign oil.

    Bio -fuels can be made easy from Hemp.Hemp can clean our atmosphere it can provide a cheaper way for us to make paper and save our rain forest.I like you idea though.With Bush in Office we may not be able to drive or have food to eat maybe the goverment should enforce your idea.

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  • No. You can't nationalize a commodity -- the government can only ensure that the product is meeting set standards.

    I do think something needs to be done about the greed of the oil companies. Just last week, oil production rose -- yet the oil suppliers continued raising the price of barrels. That's just proof positive that they assume that consumers will continue to pay regardless of how expensive gas becomes.

    What we need is a massive boycott of some kind. But that simply isn't going to happen.

  • 1 decade ago

    No,may be worse the government handleling would not be a good idea.prices are up because of demand from India and China and futures investor's and because OPEC says so.The oil companies make less profit than Microsoft.We have not built a refinery in 30 years.Wonder if that's because they thought we would have electric cars by now.

  • 3 years ago

    specific, after the depressing, sleazy mess that the republicans have created from capability - specific - nationalize the lot and then overlook to pay off the former vendors. yet u . s . will possibly in no way do something that smart - we are all dedicated to being screwed by using Li'l Bush, et. al. we like precise wing lies!

  • 1 decade ago

    Name one thing the Government can run well other than their salaries, perks and retirements. Which by the way, they voted to increase by 14% when the Democrats took over. They can't even run the post office. What makes Rep. Waters think they could run a gas station much less a multi-national Corporation. All she did was be honest, by mistake, and admit the Democrats are Socialist.

  • 1 decade ago

    Since when has giving the government exclusive control over something ever made it cheaper and more accessible?

    Not only would prices stay the same but they'd have another way to tax us on it. Supremely bad idea.

  • Anonymous
    1 decade ago

    No...holding the oil companies criminally responsible for breaking antitrust laws probably would.

    http://www.usatoday.com/money/energy/2002-04-30-ga...

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