Wednesday, April 26, 2006
Gas Prices - Are we Being Gouged?
WK OPINION
When gas prices hit record highs, it is not uncommon to look for someone to blame and many people are looking to the oil companies, who made record profits this year. Are they gouging us?
The short answer, is no. They make a lot of their money in gambling on energy markets and this in no way affects the prices of oil - unless you are trading oil on Wall Street. True, that is not where most of the profits come from, but when you factor in research and exploration, the oil companies are not even in the top 40% of companies in terms of profit margin.
If you are looking for an industry that really gouges you, why not go right to the top, where the pharmeceutical companies make 18.5 cents on the dollar, or banks which make 18 cents. Now compare that to the oil companies who make 8 or 9 cents. By the way, the national average of all industries is 6.8 cents per dollar.
Each time accusations of price gouging have come up over the years, the oil companies have come out unscathed.
So why are gas prices so high? Who is to blame? The question is not a difficult one to answer if you think clearly about it.
Blame Mother Nature. Remember Hurricane Katrina? A number of refineries are still offline. Three refineries on the Gulf Coast shut down by last fall’s hurricanes are only now reportedly beginning to return to operation, or soon will be.
Blame the EPA. Can you say MTBE?
Blame China. Global demand has SOARED with the explosive growth in China and India, among other places.
Blame all the SUV-driving folks out there. Everyone has the right to drive what they want, but these decisions have consequences. These vehicles waste a LOT of gas. The consequences are felt at the pump.
But CRUDE prices are at an all-time high, you say. Can't we blame OPEC? Yes and no. Crude prices are high because we are buying more of it to protect possible shortfalls due to our refinery limitations due to Katrina after effects. The cycle always starts with DEMAND.
So when looking for someone to blame, look at yourself first. Look at your neighbor, look at China, look at the EPA, look at Mother Nature, and look at the environmentalists who will not allow us to build any refineries for over 30 years.
WK
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When gas prices hit record highs, it is not uncommon to look for someone to blame and many people are looking to the oil companies, who made record profits this year. Are they gouging us?
The short answer, is no. They make a lot of their money in gambling on energy markets and this in no way affects the prices of oil - unless you are trading oil on Wall Street. True, that is not where most of the profits come from, but when you factor in research and exploration, the oil companies are not even in the top 40% of companies in terms of profit margin.
If you are looking for an industry that really gouges you, why not go right to the top, where the pharmeceutical companies make 18.5 cents on the dollar, or banks which make 18 cents. Now compare that to the oil companies who make 8 or 9 cents. By the way, the national average of all industries is 6.8 cents per dollar.
Each time accusations of price gouging have come up over the years, the oil companies have come out unscathed.
So why are gas prices so high? Who is to blame? The question is not a difficult one to answer if you think clearly about it.
Blame Mother Nature. Remember Hurricane Katrina? A number of refineries are still offline. Three refineries on the Gulf Coast shut down by last fall’s hurricanes are only now reportedly beginning to return to operation, or soon will be.
Blame the EPA. Can you say MTBE?
Blame China. Global demand has SOARED with the explosive growth in China and India, among other places.
Blame all the SUV-driving folks out there. Everyone has the right to drive what they want, but these decisions have consequences. These vehicles waste a LOT of gas. The consequences are felt at the pump.
But CRUDE prices are at an all-time high, you say. Can't we blame OPEC? Yes and no. Crude prices are high because we are buying more of it to protect possible shortfalls due to our refinery limitations due to Katrina after effects. The cycle always starts with DEMAND.
So when looking for someone to blame, look at yourself first. Look at your neighbor, look at China, look at the EPA, look at Mother Nature, and look at the environmentalists who will not allow us to build any refineries for over 30 years.
WK
# posted by Pete @ 8:56 AM 
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