Why do gas company profits go up when the price of oil goes up?
Well, the main reason is that many gas companies are vertically integrated. This means that besides selling gasoline to the filling stations that you buy it from, they have a variety of other buisnesses. Companies like Exxon also refine oil into various components, are hired to pump oil from known reserves, explore for new reserves, consult with large oil producing nations/companies on the most efficent way to extract the oil, and of course pump from their own oil fields. Thus, their refining and wholesale buisnesses is likely not growing as rapidly as in the past, and potentially making less. This however is more than offest by the rapidly rasing profits of their other lines of buisness. Many companies that use comodies hedge their future supplies by buying contracts. This gives them the option to buy their supplies at a fixed price. This results in less volatility for the company, but they pay a premium. If the actual price is less when they actually need to purchase the oil, they wi
