Saturday, February 26, 2011
Captain Obvious: Oil Companies Can Do Whatever They Want
Not to mention profit of course. The gas stations raise their prices instantly in response to whatever reason they want, and lower them very gradually when those reasons change or don't pan out. If there was a sudden shortage of water in a city, and every retail outlet started jacking up prices instantly, they'd be guilty of price gouging. And of no morality whatsoever. Oil companies nearly always get a pass. We need it, they've got it, and we'll pay whatever they ask. Back in mid-2008, prices jumped to $4.50 per gallon. We groused about it, but we paid it. It gradually dropped back below $3.00, but not at nearly the speed at which it climbed. We got used to paying for gas at $2 - $3 per gallon, and have done so ever since. But recently, the price crept over $3, and in the last two weeks has shot up like a rocket sled, allegedly in response to unrest in the middle east.
The stock market took a bit of a tumble in the last few days too, also allegedly in response to the unrest in the middle east. But I've grown suspicious of market prognosticating too. In the morning they might say, "The Dow is taking a hit today in response to the turmoil in Libya," or they might say, "Stocks are up a tick, despite the turmoil in Libya." They don't really know, and they never have to be correct in their guesses. The Dow can go up in the morning, down in the afternoon, and back up at the close. At each step, the market news can be exactly wrong. And nobody loses their job. When it comes to gas prices, this guesswork is all it takes to drive prices up, up and up. . .even if the turmoil in Libya ultimately has little effect on actual oil prices. Don't get me wrong, I'm aware that the price of a barrel of oil has risen of late (though I'm not convinced it's for concrete reasons), but should have had zero effect on the price of already refined and processed gasoline. They just did that because they can.
Through it all, the oil companies are the highest profit makers of any other industry in Earth history. They are also tax payer subsidized to the tune of additional billions of dollars. We pay for them to drill it, we pay for them to refine it, we pay for the final product. When you factor in all of the costs for oil (don't forget our military in the middle east), I wonder what the real price per gallon is? Whatever it is, we'll pay it.
Democrats say that we ought to develop new, greener, more efficient forms of energy in order to wean us off of oil, and make the price of it irrelevant. Republicans think we ought to "drill baby drill" anywhere and everywhere--despite any ecological or aesthetic damage--to flood the oil market, and bring the price down. One is a long-term fix, one is a short-term fix, and both will take a decade or more to implement. In the meantime, we'll pay whatever Big Oil asks. And they'll continue to be the most profitable corporations on Earth, while the Middle East remains the most volatile region on Earth.