The Q&A:
Q: Why are the prices so f*cking high?
A: The oil companies don't set the prices that you're seeing at the pump, nor do they set the prices of crude oil. The prices are set by the market, which is not controlled by anyone, just like the rest of the FREE MARKETS aren't.
The factors contributing to such high prices include increased demand (China & India) with limited capacity for production and refining, lack of spare capacity (the reason why even Venezuela and Iran can level threats against the US), unstable Middle East, taxes and government regulations, and perhaps the heaviest of all - speculation. Paper trading accounts for as much as the third of the crude's price these days. So much so, that the usual chain of physical commodity driving the paper trading has been turned upside down, and with companies like Goldman Sachs, Merill Lynch, and other financial giants doing most of the paper trading, the prices on crude oil rise in response to heavy speculation on paper derivatives by these players, and not due to the inherent lack of supply.
Q: You're saying that the oil companies aren't deserving of the blame, but they're the ones responsible for building the refineries, increasing the capacity, and they're the ones posting record profits! Explain that!
A: Yep, they ARE the ones responsible for building the refineries. Here's a question for you: did you leave a tip for Exxon or BP eight years ago, when the price of crude was less than $20/barrel? No? Hm… How odd. I'm sure the news did, mention that they were loosing money in refining and production. Was the $.70 / gallon gasoline acceptable then? Well, guess what, refining wasn't profitable, and they didn't invest in a failing enterprise. Would you have stopped at Exxon's gas station to pay $1.50 if they explained that their gas is more expensive because they're investing in refining, which is loosing money for them at the moment, but it might pay off in the future, while Shell, across the street was selling same exact gas for half the price? No again?!. - Most perplexing.
And regarding the profits - yep, they are making good money now. In case it did not occur to you earlier, they are actually in business in order to make money (no, they're not altruists). So when the return on their investments (let me repeat that - THEIR INVESTMENTS) was negative, that was alright by you, but when the profits have started to roll in, that's not cool anymore; is that right?
Well, look at it this way, for now, building refineries and looking for more oil is a very profitable business. So more likely than not, if the prices remain reasonably high, we'll see more refining capacity and more new accessible oil fields. In time, the prices will level off. And if not, being the entrepreneurial creatures that we are, we'll find other, cheaper sources of energy (All of a sudden, the R&D for alternative fuels has become a good investment too. Then again, you might be disappointed to find out that this research, too, is done by the eeeveel, eeeveel oil companies.)
If you have other questions, objections or concerns, please don't hesitate to ask.