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Also, why did it take oil companies this long to figure out they could collectively charge whatever they want? Why did we ever have low prices after having high

• lotsofpulp 5y ago
  Because outside of OPEC, they are not colluding with each other, and in general, the more they extract and sell, the more profits they earn.
• NovemberWhiskey 5y ago
  One reason is because although the short-run price elasticity of demand for fuel is almost zero, the long-run is not. i.e. if fuel prices stay high for months, consumers keep filling up their cars, keep buying the same fuel-inefficient cars they always have, keep making the same number of trips If prices stay high for years, consumers start looking for other transport options, start buying more fuel-efficient (or electric) cars, etc. Also: when oil companies make outsize profits during normal times, you get people with pitchforks calling for heads which is bad PR; and you get certain stripes of politicians calling for price controls etc.
• stepanhruda 5y ago
  Because it’s difficult to verify how much who extracts, so very easy to extract more than agreed upon and earn more at the cost of others. This case is literally used as an example in an economics class.
• ZeroGravitas 5y ago
  The theory advanced in the video someone else posted is that they always knew they could push it too far and get blowback. But now it's their last throw of the dice so they're going all in. Previously they had to care about the next 40 years worth of profits, now they know there's a cliff edge coming, which brings new strategies to the fore.