4.21.2006

Bought Gas Lately?

I haven't. Due to a lucky coincidence of living close to work and having a Honda, I haven't had to buy gas since it was at the low, low price of $2.83 per gallon. Now it pushes $3.20. Now, granted, for a 12 gallon tank, that's only two dollars difference for a tank full, but still.

My point, however, is that this drastic increase over the last few months has been blamed on the sacred laws of Supply and Demand. The Foundation for Taxpayer and Consumer Rights says this isn't so. Their study (pdf here) showed that it was "corporate markups and profiteering," not market forces.

Independent petroleum consultant Tim Hamilton analyzed gasoline price increases from January to April to find that:

* Increases in the "spot" market price of crude oil -- which is the highest price a major oil company would pay for crude oil -- accounted for only 12 cents per gallon. California's percentage sales tax increased fuel prices by another four cents per gallon. More than 40 cents of the 60-cent increase in gasoline prices over 3 1/2 months is attributable to increased refinery and marketing profit margins for the oil companies;

* Neither the MTBE phaseout nor the substitution of ethanol is a serious part of the increase. If the MTBE phaseout or ethanol blending specifically increased costs for oil companies in California, other states in the West using conventional unblended gasoline should be much less affected. Yet Washington State, which uses only conventional gasoline and has similar refinery capacity and crude oil sources, mirrored California's increase;

* The profit increase of 42 cents, on top of record profits last year, means California gasoline will cost consumers approximately $546 million more in April 2006 than in April of last year.

"While oil companies continue to blame crude oil prices and ethanol additives for the recent gasoline price spikes in California, the chief cause is increased profiteering by oil companies that have previously posted world record profits," said Hamilton.

"Oil companies are opportunistically using the rising world price for crude oil as an excuse to excessively raise gasoline prices and pump up their profits, even though the spot market price for crude has gone up far more slowly than gasoline prices," said FTCR President Jamie Court. "In addition, the spot price is higher than most oil companies pay, since they either harvest their own crude or pay more stable and often much lower contract prices.
Do you trust BushCo, full of Texas Oil Men, to allow an investigation into this? I thought not.

And if the only consequence of rising gas prices was that I paid $2 more for gas every three weeks or so, I wouldn't complain. Really. I pay much more for coffee than I do for gas. But it isn't just that. I pay more for food, shipped from California. I pay more for housewares at Target. I pay more for everything that came off of a truck. Everything comes off of a truck.

All this is, of course, bad for the economy. Which is bad for my job. Which is bad for me.

Republicanism is more concerned with corporate profits and letting fat cat friends get richer than it is in protecting American jobs, allowing Americans to prosper, or keeping the American economy strong.

1 comment:

Christopher Walker said...

Well, give the gas companies a break. C'mon.
After all, when they pension off a departing CEO with a
$400 million severance package, the money has to come from *somewhere*.

I pulled together a little information about the sweetheart relationship
just one of these companies, Exxon/Mobil, has with powerful incumbents,
and posted it on an ActBlue web page. Readers who are all cranky about
gas prices want to have a look at it:

http://www.actblue.com/page/Defeat+Exxon+PAC%27s+incumbents