The inevitable and misplaced backlash against the oil companies begins:
The major oil and gas companies knew there would be a public backlash against their massive profits from higher fuel prices and took out advertisements urging conservation, suggesting they were looking out for consumers.
Yet Amy Myers Jaffe, energy expert at Rice University’s Baker Institute for Public Policy, says they could have done more than signal higher fuel bills; they could have helped prevent them.
She says the majors must reinvest more profits in new exploration and production, substantially increase refining capacity and store refined products in the US to prepare for the sort of emergency the country experienced this summer, when two hurricanes struck at the heart of the nation’s energy infrastructure.
It is because those measures are not being taken, she says, that global inventories are so low and prices are so high. “You and I are paying for that,” Ms Jaffe says.
I am pretty sure that this is a case of the reporter ‘interpreting’ what Ms Jaffe really, said, because if it were that simple, companies would do it. It isn’t, what with oil reserves diminishing, regulation, etc., and it is inaccurate to portray this as simply oil company perfidy, as comforting and entertaining as that may be.
Furthermore, it appears they have a point about their profits:
Yet Exxon believes the oil industry is being targeted unfairly.
“We earned $9.9bn on $100.7bn in revenue – 9.8 per cent. Citigroup and Microsoft earned 33 per cent, by comparison,” said Mark D. Boudreaux, Exxon spokesman. “There only seems to be talk about windfall profit taxes on oil, while there are over 20 Fortune 500 companies who made significantly more than ExxonMobil on an ‘apples to apples’ comparison – cents income per dollar of revenue.”
Nonetheless, with record profits by Exxon, Royal Dutch/Shell and others, and polls showing anger over rising prices, politicians are talking about imposing a windfall profit tax.
Your outrage about high fuel prices (which is misplaced, because if you want lower fuel prices, you should be mad at yourself for your over-consumption, you should be mad at Detroit for making gas hogs, and you should be mad at other Americans for continuing to overconsume, not the people who provide the commodity), is going to be used as an excuse to wrestle the profits out of the hands of the shareholders (you and me) who own the company and given to the government, all in the interest of mitigating our pain and anger.
These bastards in Congress have some balls, don’t they? And while we are at it, let’s remember who benefits the most from sales of gasoline:
As illustrated in Figure 1, between 1977 and 1985, the oil industry recorded relatively high profits—averaging nearly $33 billion per year, after adjusting for inflation. These good times were followed by ten years of relatively flat profits, averaging just $12.3 billion per year. In 1996, profits began to rise again but have been anything but stable, ranging from $9 billion to nearly $42 billion per year. Between 1977 and 2004, the industry’s domestic profits totaled $643 billion, after adjusting for inflation.
In contrast, federal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.
Just so you know what is really going on when the inevitable cries for taxes on ‘windfall profits.’ What they really mean is they want to rip off the mutual funds and retirement portfolios of normal Americans who own stock in these companies and spend it however they see fit. It is an excuse to thieve, and little more than that, and it is made only worse by the fact that some of the population, so convinced in the evilness of oil companies, will support this nonsense.
Horshu
I’m not really angry about vehicle fuel prices, as I only fill up every 2 weeks (at $50 a fillup). It’s the electricity prices that are getting out of hand, IMO. I’ve had *3* $200 power bills in an 800 sq ft apartment. I have a friend in a 2k sq ft house paying $500 a month. Those are insane power prices that everybody has to pay, and there are very few ways outside of sweltering in a hot house to lower that price.
Bob In Pacifica
My mom owns part of an oil well down in Mississippi. They uncapped it a couple of years ago and the money’s flowing. Yahoo!
It’s been reported, maybe it was after the last quarter’s record profits, that Exxon had too much money. They couldn’t give it to the shareholders, they couldn’t, poor dears, put it into their (allegedly) underfunded pension fund. There was something about having a big company picnic and hiring the Commodores, I think.
How about they pay for the fucking war?
db
The major players in each sector have their own PR battles to fight. Citigroup fights the “we want you to go into debt” battle. Microsoft fights the “we want you to only use our technology” image. Starbucks fights the “we destroy rainforests and small farmers” image.
The image the oil sector battles is a pretty hard one to fight with searing images of the Valdez still fresh enough in people’s minds. So I don’t think comparing profit margins to Citigroup or Microsoft are pretty helpful here.
Let’s not forget that we are in a war in the Middle East that has no doubt hurt the ability of the US to negotiate any deals with the likes of Iran or Venezuela. We can redirect our anger towards the govt by either as JC suggests 1) protesting proposed taxes on this sector (or boneheaded tax breaks for SUVs) or 2) protesting US foreign policy that has led us down this path or 3) both.
Either way – it is directing anger and energy toward our govt.
I am more for directing anger at ourselves (something that JC mentions here). I get peeved when people ask “What are the oil companies doing?” “What is the govt doing?” Well, what about us? Since July, I have been taking public transportation to work twice a week (would be more if public transportation was available as late as I get off sometimes) – saves me about $13/week. $13x16weeks=$208. If taxes were higher on gas, just imagine how much more money I’d have made up to this point, which should offset any losses to my 401k as a result of increased taxes on the oil sector, right?… if it only worked that nicely.
John Cole
DB- I take the bus every day.
RonB
John, first time commenter. I’m delighted to find a right-center voice who is ready to admit when his own political wing is fucking up.
I just wanted to share this article that suggests, among other things, that it’s the traders, not the oil companies per se that are making prices jump:
A Harder Look At Gas Prices
Its worth noting that Dianne Feinstein tried in ’02 to reinstate trading oversight with an amendment to a bill that was shot down in a rather partisn manner by your party and mine, the Republicans.
BarneyG2000
I’m not so mad at the huge profits, but why is Bush/Congress giving the oil companies 10 billion in tax credits in the new energy plan?
Also, they haven’t built a new refinery in the last 30-years because they were too busy shutting down over 200 refineries to increase efficiency/profits.
Mr Furious
How about this, John? I actually think the Citigroups are more despicable than the oil companies. By a long shot. And my anger at the government? You bet! The disgusting lending industry already got their turn at the corporate welfare trough this year with the abominable Bankruptcy Bill.
The oil companies are not much better. Fine, they have more overhead, so a smaller margin. Big deal. They are still making more money than they know what to do with. Perhaps they can convert it to fuel? To expect the federal government to subsidize these companies in terms of exploration, refineries or anything else when one considers the financial state of the two institutions (one trillions in debt, the other rolling in billions) is fucking absurd, and I’m not even going to factor in the war (which I probably should). The recent eenrgy bills and initiatives are preposterous.
THAT is what pisses me off the most.
Steve S
First, I just want to note… I found it to be an amazing coincidence that just as the oil companies were reporting profits for the quarter… gas prices at the pump fell.
I think a windfall tax is a damn stupid idea. I’d rather have the money in my own pocket, not the governments.
That being said, the oil companies deserve a great deal of disgust for earning record profits at a time when Americans are paying ever higher prices. I think the Congress should strip the tax code of any corporate welfare for oil companies. Like this energy bill that gave them big handouts.
The problem fundamentally is that the oil/gas markets do not operate as a free market. One company doesn’t undercut another to drive prices down, as should be occuring.
Vladi G
Aren’t most, if not all, gas excise taxes calculated per gallon? So an increase in the price of a gallon of gas doesn’t really affect gas taxes one bit.
And it’s a little short sighted to say that “the government” benefits the most. First, I’m not even sure that’s accurate. Second, I don’t know about you, but I kind of like driving on paved roads. It’s more comfortable, and it’s better for my car. I take the train to work every day, so I’m not filling up all the time, except in the summer when I’m off playing golf every weekend, but when I do drive, I kind of like taking advantage of the things that gas taxes pay for.
Boombo
You want Americans to take responsibility for their actions, John?
…
…
HHAHAHAHAHA! You are a funny, funny man.
Jorge
Again – my slogan for any politician with any guts.
“If you aren talking about energy independence, you aren’t talking about America’s future.”
Hydrogen and other alternative fuel sources are not science fiction or some unreachable, far-off goal. I’m not sure why so many people are either too scared or to cynical to realize that energy independence would – with out any hyperbole – help solve or ease a majority of america’s problems. From the environment to foreign policy to how much we pay in taxes to the cost of living/retirement – it would all be transformed.
Blue Neponset
Oil is a commodity so the market controls its price. It is foolish to blame the oil companies for selling a commidity at its market price.
It is also foolish to blame a small group of consumers of a commodity for its high price. The demand for oil is driven by global forces, of which, the US car owner is a small part. If I start taking the bus to work it won’t change the demand for oil coming from India, China or Belize. It also won’t change the energy policy of the US government.
I would like to add Bush voters to the blame list if I may. Bush and his party’s idea of a comprehensive energy policy is to drill for oil in ANWR. As long as the Repubs continue to ignore the long-term energy needs of our country we will have an economy directly tied to less than predictable global oil market.
Pug
I’ve worked in the oil business for 28 years now. These are good times and, believe me, we’ve also seen our share of bad times. Very bad times when no one seemed to feel too sorry for us, but that’s OK.
Oil is a commodity and, therefore, subject to boom and bust cycles. The entire history of the oil business is glut followed by shortage and that is just basic economics. The same cycles occur with beef, sugar, cotton and all other commodities.
High prices stimulate production and dampen demand. Low prices stimulate consumption and dampen exploration. High prices lead to low prices and vice versa in a fairly long cycle. It’s supply and demand, just like they taught you in Economics 101.
Just leave it alone and it will get better before long. I know it’s tough on people depending on driving their (low mileage) cars and heating their homes, but the government can’t control the largest worldwide market in existence even if they try.
I’m a little surprised to see righties like Judd Gregg and Bill O’Reilly blowing gaskets, though. Conservative populism is such an oxymoron.
Pug
Bush and his party’s idea of a comprehensive energy policy is to drill for oil in ANWR. As long as the Repubs continue to ignore the long-term energy needs of our country we will have an economy directly tied to less than predictable global oil market.
Last night on The Daily Show they said Bush’s energy policy was to make oil companies so profitable that they would get sick of money.
Mr Furious
Drillin’ oil is hard work. Just ask George W. Arbusto.
Lines
It takes more hard work to drill and not find oil in the Gulf of Mexico than any of you could ever understand.
Hard work is right, do you know how hard it is to sink an oil company in Texas? Not just any fool can do it, it takes a special fool. A very hard working special fool
cd6
I don’t think whining “but our margins are so low” is a viable excuse. Waa waa waa we only made 10 billion? Please.
Yeah, oil is technically a commodity. But its a commodity that drives everything. Not just the cars we drive. The price of oil goes into anything made in plastic. The price of oil directly afferts business due to the cost of air travel. The price of oil directly affects any product manufactured outside the US and then shipped here (which is most of them.)
Oil companies took in 10 billion dollars on something America NEEDS. Sure, Microsoft took in 33 percent, or whatever it was, but our entire economy isn’t driven in large part by microsoft, much as Bill Gates would want you to beleive.
Lines
if our entire economy is based of off gasoline/oil, why is it still privatized and allowed to fluctuate to the point of endangering our very way of life?
Why do oil companies hate America?
Larry
As BarneyG2000 and others have said, it isn’t the profits. It’s the fact that those profits are financed by our money in the form of tax credits, the Oil Depletion Allowance, AND the cost of maintaing a fleet in the Persian Gulf to protect every tanker (20 years & counting).
They get OUR MONEY for the benefit of their business. There may have been justification for helping Big Oil at one time, but these profits indicate that they are on their feet, and these subsidies are simply an ongoing theft.
How in the name of all that is hypocritical can this be defended?
Larry
cd6
The oil companies didn’t take in 10 Billion Dollars.
That was one firm’s 3 month PROFIT!
Bob In Pacifica
My mom’s oil well in Mississippi is generating lots of wealth. When I visit her I hope she buys me a new coat.
Steve
The oil companies have gotten such large subsidies from the federal government in recent legislation that a windfall profits tax would simply move the baseline back towards zero. Also, it’s not like stock prices track profits on a dollar-for-dollar basis; if a windfall profits tax was imposed, it’s unrealistic to suggest that the shareholders would bear all of the burden. As long as the companies continued to be strong and profitable, which is an underlying assumption of the tax, the stock price would continue trucking along.
As for why there hasn’t been enough exploration, refining, etc., the answer is vertical integration. If you had a company that was solely in the business of refining, then the amount they refine would be purely determined by supply and demand. But when the oil business consists of huge corporations which handles oil from cradle to grave (exploration, drilling, refining, transportation, retail, etc.) then they’re going to focus on whichever part of their business has the highest profit margins. If refining shows only a small profit, they’re likely to focus on other aspects of their business and rely on other companies to do the refining. It’s something of a “free rider” problem.
I did legal work on a couple of the larger mergers in the oil industry during the last decade and I do think the government was concerned about vertical integration issues and made some effort to keep competition in the market. I don’t really know whether they could or should have done more. But I know that industries like this one are a lot more complex than the models I studied in my economics textbook.
Steve S
The problem is not the oil. The problem is the gasoline.
I believe the gasoline market is not a free market. There are a handful of refineries, and they are controlling the price.
It seems to me that in a free market, we would have companies competing on their efficiency at refining the oil, or supplying the gasoline, etc. Just like any other commodity item.
But this is not the case. We’re stuck, and there is no invisible hand driving the market towards improvement.
The only invisible hand available is between price and demand. That is, we can buy more efficient automobiles. That’s a good piece, but it should not be the sole force.
Vlad
If you want to make a list of things to hold against oil companies, “excessive profits” need to stand way back to make room for “human rights abuses”. Some of their activities in places like Nigeria are truly despicable.
model_1066
One point people seem to miss…not all revenue generated by oil companies comes from the US. Big oil is multinational, and the American giants like ExxonMobil and ConocoPhillips are making and spending money all over the world. Likewise, foreign oil companies like BP have quite a bit invested in thier US operations.
Another point is that these companies are publicly traded, with profits being invested in equipment and personnel, and distributed to tens of millions of stockholders. The oil barons went out with Standard Oil’s breakup, which is why you don’t see the concentrated wealth in oil companies that you do in more modern industries. Where’s big oil’s equivalent of Bill Gates (domestically, I’m not talking about a Saudi prince)?
Doug
I think the windfall tax approach is opportunistic and lazy on the part of legislators. What they should do is take a look at our country’s tax structure during our most prosperous eras and attempt to emulate that. What I think you’ll find is that those tax structures tended to inhibit concentration of wealth in a few hands, and redistributed wealth from the extremely wealthy downward. Unfair? Possibly. But as a practical matter, it made things better in this country. Reimplement the tax structures of the 40s, 50s, 60s, and/or 90s.
And yeah, our energy policy is pretty foolish. At the very least, there is no need to subsidize oil companies. We need to subsidize companies competing with oil companies to provide alternative sources of energy. And we need to do it at levels at least commensurate with the subsidies currently provided to oil companies. (Including subsidies in the form of military protection for oil fields and tankers.)
model_1066
Lines –
The gulf of Mexico isn’t the only place in Texas to find oil. There’s a little thing over to the west called the Permian Basin
Horshu
In all honesty, though (and I’m a liberal, mind you), from a capitalist standpoint, oil companies have no obligation to return any of their profits any more than you or I are obligated to give our extra money to the poor. If the market pays $3 a gallon for gas, then it’s the fault of the market. I’m surprised *Republicans* are suggesting taking away profits and putting it into some energy fund for the poor, as it sounds Venezuelan, if you catch my drift. *However* if there is some sort of organized collusion between the companies to artificially raise prices (including gouging), then they should be judged in a court of law and get raked over the coals 100x over what Big Tobacco went through.
But unless they did something illegal in getting those record profits, I would think that mandating a company put profits into some kind of government fund qualifies as an illegal seizure.
p.lukasiak
Just so you know what is really going on when the inevitable cries for taxes on ‘windfall profits.’
give me a break….
anyone who drives a car knows that once the oil company profits came to light, gasoline prices dropped by 20-25 cents within DAYS — and there was no significant reduction in crude prices.
We all knew that the oil companies were engaged in price gouging, and the minute we could prove it, it stopped.
Gary Farber
“… because if it were that simple, companies would do it.”
Why would they do it? Would it maximize profits? No? So why, then?
I’ve never had a driver’s licence in my life, let alone owned a car, by the way. I agree that when the price of oil goes up — and in the mid-term (there is no long term), that’s all it will do — it goes up. But you don’t seem to supply any reasoning for the above assertion, which is something else.
Jorge
p. lus. wrote
“anyone who drives a car knows that once the oil company profits came to light, gasoline prices dropped by 20-25 cents within DAYS —- and there was no significant reduction in crude prices.”
Wouldn’t that be proof that the market corrects itself with out Government interference? Maybe what we need is more and more transparency in business and less government interference (which includes everything from subsidies to regulation).
Kimmitt
In theory, it would be the threat of state interference which would drive the oil companies to lower their prices.
Anyways, I’d be more receptive to oil companies’ whining if they weren’t already such massive recipients of corporate welfare. If they expect to be bailed out during bad times (or, hey, even mediocre times), then they should expect to be taxed during good times, right?
gogozilla
Record profits are still record profits. It might sound like an apples-to-apples comparison to say that Microsoft or whoever has a higher profit margin, but a real apples-to-apples comparison is to look at the oil industries’ current profits vs their past performance, not to compare them to a corporation in an entirely different business.
Sherard
Come on, John, read between the lines. I don’t particularly care about the profit margin of Exxon vs. Microsoft. Oil companies can set their prices wherever they choose. But when your nominal profit is about 10% and then a natural disaster hits and you profit MORE, let’s just say any heat they get is well deserved.
KC
John makes an excellent point here:
While I don’t think it’s wrong for Congress to take a look at the oil companies’ tax situation, etc., I do have to say that since moving downtown Sacramento, I don’t worry about gas as much. I either bike or walk to work everyday and it has saved me about $150 (or more) a month. If I were still commuting everyday, I can promise I’d be a lot more pissed about the cost of oil. So, though I don’t think about it much, I guess conservation can make a difference, at least in terms of your annoyance level.
oscar wilde
I have a very good idea what the reaction to the following will be, so I bother not to set out a substantial arguement in defence.
Here in one of the worlds highest taxed, and most spied upon countries in the world, the price of a US gallon is six dollars.61% of that being tax.
The licence plate fee is two tiered, under 1.4 ltr. $170,
over 1.4ltr. $290 per annum.
And now the herasy. Having had cheap gas since time immemorial you now take it as “Divine Right” that the status quo should remain, well I’m sorry folks, I think you are going to have to learn to take the pain.
I am well aware of the financial arguements regarding high fuel prices, But, conversely a steady growth in the price of road fuel, would, in the long term be good for America and the world.
Untill a more realistic level is reached, the Us will continue to manufacture and glorify the penile extentions called suv’s and their ilk, and drivers will continue to piss fuel down the end of the tailpipe.
Yes and I know suv sales are on their ass, but if the price of gas drops, will it be “Panic Over”
tzs
Heck, the higher energy prices go, the better. That’s the only thing that’s going to get us off our duff and start looking harder at alternative energy generation.
I simply think it ridiculous to burn hydrocarbons when they’re so much more useful as feedstock for other materials.
BTW, Japan supposedly is looking again into energy transmission from satellites. I know the Russians did a lot of work on that, too.
metalgrid
Just to reiterate what Larry & Barney and some others mentioned, I first saw this on Liberating Our Heritage (http://saveliberty.blogspot.com/)
Steve S
I agree with this. Although it counters John Cole’s claim that you have no right to complain about high prices.
I think you do have a right, and I think that complaint system is part of Adam Smith’s invisible hand. It’s an aspect of the market.
However, Kimmit is also correct:
It is the threat of state interference that more often than not drives companies to do the right thing.
Frankly, I think the burden is on companies to self-regulate. That is, when the market starts screaming, they had better respond. If they don’t and instead claim “Well NYAH! NYAH! Youc an’t stop us because it’s legal”, then I do happen to believe it is in the consumers best interest to make it illegal.
I don’t like government interference in markets, but sometimes that is the only way for the little people to get any results. The other way is through class action lawsuits.
Corporations need to be part of the community. If they are not, and they are not operating in the best interests of the consumers, then they have no right to exist. Such was the case of Enron with their traders cheering about little granny losing her heat because they were manipulating prices.
Darrell
No it’s not. It’s when customers start spending their money elsewhere. That’s what causes companies to change, improve and innovate..or go under. It’s astonishing how many on the left look to government as their savior to “force” companies to “do what’s right” as defined by them.
Having said that, if oil companies are getting some sort of special tax breaks, I’m all for ending those ASAP
p.lukasiak
There really needs to be an anti-trust/price fixing investigation. Before the profits were announced, gas prices here in philadephia at stations at the same intersection were always within 1-3 cents of each other.
Suddenly there was a 20 cent drop in prices — at ALL stations.
Given the evidence, its pretty difficult not to conclude that there was an effort on behalf of the oil companies to maximize profits by having EVERYONE overcharging for gas.
Zifnab
Of course, the joke is that you can’t really shop around for energy. By and large, energy companies work within a locality and work as a monopoly. There are ways of buying “clean energy” from wind-power plants and the like, but by-and-large those energy prices tend to be slightly higher than standard energy prices anyway, so you’re not actually saving money.
What’s more, if the conspiracy theory is true and oil companies really are conspiring together to fix prices, you can’t even shop around for your gasoline. And you can’t simply refuse to purchase gas.
Sure, we could play the blame game. Blame Exxon, blame SUVs, blame Bush, blame the Middle East. But blame won’t lower oil prices. And it appears that oil companies won’t lower oil prices either. So unless you know of a well where you can go and refine your own oil, you’re screwed unless the government intervenes.
Tim F.
By itself that’s not such a big deal. Gasoline prices are always set on a neighborhood-by-neighborhood basis so it’s very rare that two stations on the same street will have wildly different prices.
p.lukasiak
By itself that’s not such a big deal. Gasoline prices are always set on a neighborhood-by-neighborhood basis so it’s very rare that two stations on the same street will have wildly different prices.
Tim, the underlying assumption that keeps accusations of “price-fixing” being made because similar prices are found in the same neighborhoods is that competitive pressures force all stations to operate on the lowest possible profit margins, and that the operating costs of these gas stations are essentially the same.
What happened here gives the lie to those assumptions. There was clearly a LOT of give in prices that was not being passed on to consumers. And that is clearly because of price-fixing by the suppliers of gasoline.
I spoke to a couple of gas station employees and managers, and what they told me was that gasoline prices were set not based on the cost of the gasoline sitting in their underground tanks, but of the announced cost of the next shipment of gasoline.
So, although “collusion” between neighboring gas stations remains a possibility, the primary reason why EVERYONES gas prices dropped considerably was because the refiners all dropped their prices in the wake of the “windfall profit” announcements. And it is ONLY the profits announcement that could be responsible for the drop in prices. (Crude prices didn’t fall considerably, there was no announcement of higher than expected stocks of gasoline or additional refinery capacity coming on-line, etc. that would account for the significant reduction of prices at the pump.)
PotVsKtl
It would be nice if that were the case. Unfortunately, as long as we have no choice, we will accept the only choice available. As long as we accept the only choice available, nobody will have any incentive to find a new one. In other words, Monopoly! (Or is that Jenga!?)
gogozilla
Why should the consumer have to endure the temporary gouging that occurred before the market “corrected” itself? You state that we need more transparency and less regulation, I say that level of transparency will never occur without the correct level of government regulation. I think history has shown us that whenever government oversight is lax, big business tends to behave unscrupulously towards its customers, employees or whoever else gets in the way of a rosy bottom line.
jg
Gas prices always go up at the start of the summer and go down after summer. Every year, same thing happens.
gogozilla
How is it astonishing, Darrell? Given the relative power that a large corporation has vs an individual, I don’t think it’s surprising at all that people would look to government to ensure that businesses act responsibly.
For example, did consumer choice establish the 40 hour work week or overtime pay? Of course not. In response to deplorable work conditions, government stepped in and set up minimum standards that businesses had to comply with.
jg
Darrells right we don’t need any gov’t help. We’ll just buy gas from another source if the source we have gets expensive.
Steve S
That is true in a free market with multiple competitors. I’ve already stated that such a market does not exist for gasoline, so your point is rather odd.
It is interesting, however, that you have no problem with the state getting involved to censor speech, but on excess profits from monopolies you would favor the companies.
Steve S
Actually another point. The concept of a corporation would not exist except for government involvement. So again Darrell is rather hypocritical.
Like I said. I would prefer if we had a free market so market forces could self-regulate. That situation does not appear to exist with gasoline supplies, though.
Nor does it exist with natural gas, electricity and so forth.
Why don’t I tell the story about how my parents house had an LP gas tank, and they petitioned numerous times to the local Natural Gas supplier to get hooked up to their lines, but were told it was no feasible… not enough supply, they couldn’t afford to expand their pipelines, yadda yadda.
Then one day a local business contracted with Williams to supply gas to them in lieu of the local provider. Since the pipeline was going to come up along the road next to my parents house, they offered to hook their house up.
Suddenly… The local company had capacity to compete and offered to also hook them up. Amazing how a little competition works.
Competition is good. But if it doesn’t exist, then you can’t really claim that market forces will self correct. Something needs to be done to force competition.
And maybe that’s the answer. A citizen run not-for-profit Coop refinery to compete with the existing one.
tzs
*sigh*….I’d like to slam together the heads of all pure-companies-are-evil socialists and pure-gov’t-can-do-no-good libertarians.
Look, guys. Historically, markets (in the US) have been more or less unregulated until someone–or a group of someones–get greedy and rip off the customers and show no inclination towards self-regulation. When the damage gets big enough, legislators step in and start regulating stuff. We saw it with the railroads, we saw it with meatpacking plants, we saw it with drugs, we saw it with company finance statements. Result: breakup of the railroads, legislation involving food production, formation of the FDA, Sarbanes-Oxley. Other areas we haven’t yet gotten around to controlling through legislation because they either do a pretty good job of self-regulation or the complaints haven’t reached a high enough level; e.g. hedge funds.
If you don’t like having regulations imposed on you, then don’t abuse the system. It’s that simple. And if you look like you are “abusing” the system, then sure as god made little green apples, you’ll find some politician jumping on the bandwagon to “regulate” it. It’s not evil, it just how things work.
Jimmy Jazz
I think the psychology of this whole thing is pretty funny. People get upset at their cable bill. They get absolutely batshit insane about gas prices. Why the difference? You get your cable bill once a month, grimace at the amount, toss it on the pile. Gas pumps have dials (now, electronic versions). When you’re filling up you don’t have much else to do but watch those dials spin, and spin, and spin, with the dials for the price spinning much faster than the dials for the amount of gas you’ve pumped. Seriously, they’ve got the same reptile-brain effect as slot machines, except you never “win”. I’m pretty sure I’m right about this.
tzs
Oh, and sorta off the topic, but it’s hysterical watching cosmetic manufacturers twist themselves into knots to state that their stuff does all sorts of wonderful stuff to the skin but, erm, doesn’t really do anything (so don’t regulate us please.)
Zifnab
That, and you can always just not pay your cable bill. What happens if you cancel your cable? No more John Stewart. What happens if you stop filling up on gas? No more moving faster than 5mph unless you get a bike.
Darrell
Will you dishonest jackasses look at the context in which I was responding? Steve S made a statement about businesses IN GENERAL, not just oil:
Govt must “force” business to “do the right thing” as defined you socialists. It was in Steve’s context of ALL business, not the oil business. And so many of you are socialists. But tell us jg, do your socialist instincts tell you we should nationalize oil, since the oil companies are ‘gouging’ us?
Steve S wrote:
A free market most definitely exists for gasoline and oil. It is a commodity with a price set by supply and demand, not by an eeevil cabal of oil companies
jg
You like to label don’t you? You can’t have a conversation with people because your not really hearing them, you’re interpreting their comments using the assumption you’re talking to a socialist. Its sad. Just because I made fun of you doesn’t make me a socialist.
There’s no market without gov’t setting the rules so there ain’t no ‘free’ market in the way you fantasize. Do you think its the gas station owners who are keeping gas prices from rising to europe levels?
Darrell
Explain for us jg, how government “sets the rules” on world oil and gas prices
jg
Did I say they did?
I said there’s no free market without gov’t. Government will always be involved, heavily or lightly, there’s no exception other than la costra nosa. You can’t buy without currency, guess where that comes from? Whats a contract without gov’t providing the legal basis for the contract? This isn’t very deep thought Darrell. You should be able to see this.
JonBuck
Of course, the high gas prices have nothing to do with all the refineries damaged by Katrina and Rita being repaired and coming back online and increasing the gasoline supplies. Nope. Nothing at all.
Take a look at this DOE web site and look at “Gulf Coast Hurricane Situation Reports”. They’re all in PDF format. But the short of it is that over the past month we have regained about a million barrels per day of refinery capacity, demand for gasoline has sunk, and we’ve had a record amount of gasoline imports (About 1.5 million barrels per day).
Here is another Dept. of Energy site that has graphs and data about recovering oil/natural gas production. And the Minerals Management Service has daily reports on shut-in production in the Gulf.
That being said, the oil companies are culpable for the lack of refinery capacity. In the 90s they systematically closed refineries nationwide. Recently here in California the state had to stop them from closing one. I can see the goverment constructing some refineries purely for national security reasons, myself.
Darrell
European gasoline is so much more expensive than US gasoline because of the heavier gasoline taxes in Europe. What is your point? Gas prices are dictacted by world demand and supply. In some states, such as California, refineries are more heavily regulated and forced to produce a more expensive (allegedly more environmentally friendly) gasoline, which also affects gas prices
Bob In Pacifica
You remember the last President who seriously talked about junking the oil depletion allowance?
Hint: He was replaced by a Texas politician after an unfortunate incident in Dallas. As they say, the rest is history.
Mr Furious
As someone you quoted out of context rtepeatedly and in multiple, unrelated threads — shut the fuck up, Darrell.
Darrell
So many of you kooks on the left truly are obsessed loons. It’s why you swoop into threads with no substantitive comments other than to insult me, DG, Stormy, or whomever you blame for the voices in your head
DougJ
First of all, I can’t believe all you lefties turned this into a conversation about Halliburton. Do you hate Cheney so much you can’t see past that?
You know what I do when I start feeling hate? I pray. I pray that all the America haters and traitors will rot and hell.
Darrell
Except that you’re the only one in this thread to bring up Halliburton.. sloppy snark Doug