Who's to Blame for High Oil and Gas Prices?

Executives of the big oil companies have been hauled before the U.S. Senate recently to defend their industry's recent mergers and record profits as American consumers face high oil and gasoline prices. I'm going to defend the big energy companies in this case, since I think they're not the reason for high prices.

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The energy companies don't set the price of oil or of gasoline. The prices you pay for heating oil or gasoline aren't set in boardrooms in Texas but in trading rooms at commodities markets all over the world.

Gas prices aren't set in shadowy conferences in shooting lodges, but in rooms of people shouting or punching computer keys in London, New York, and Tokyo. Oil is a world commodity like tin or copper or rubber or coffee. The price is set by traders anticipating supply and demand.

Rumors of war in the Mideast, terrorism against oil platforms in Nigeria, warmer weather in New England, bitter cold in London -- these are what set energy prices. Even the biggest U.S. energy companies are tiny pawns in the game compared with the world market, flotsam and jetsam in the ocean of world oil trading.

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Full article

RECORD PROFITS defend that! They couldn't and neither can you. They are profiteering pure and simple. They are full of shit as are their defenders EOM

They have a legitimate business selling a legal product to an all too willng market place. Are you angry because they made large profits? If you want to make large profits then I suggest you start a business producing and selling a product that is in high demand.

It never ceases to amaze me that so many of my so called progressive friends are all to eager to jump on the "punish the rich" bandwagon.

Something else I rarely see is anyone acknowledging the amount of taxes paid by energy companies. According to a November 2005 article from the Tax Foundation, ..."over the past 25 years, oil companies directly paid or remitted more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments—including excise taxes, royalty payments and state and federal corporate income taxes. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy."

How many programs were funded with that $2,200,000,000,000? Where would that money have come from if not for the taxes paid by the oil companies?

Before you rant and rave you should make sure you have all the information at hand.

In addition to the millions of dollars the government is now giving the oil companies, consider how much profit is in each gallon of gas. For a company like Exxon to make $9+ BILLION in 3 months, there has to be a LOT of extra profit in each gallon of gas pumped.

Think about it. $9 BILLION PROFIT IN 3 MONTHS! You cannot tell me the public is not being gouged at the pump. And all the oil companies are making these record profits. They set the prices. You don't see $2.50/gallon at Exxon and $1.45/gallon someplace else. They all go up at almost the exact same time, and the exact same amount. It's price fixing. This is profit after all expenses have been paid. Quit defending the cronies of the dictator in charge.

To make obscene profits like this each quarter, YOU MUST BE OVERCHARGING. There is no other way to explain it. No other industry has such a huge return on investment.

Who decides what is overcharging and what is fair? As for return on investment, I'd say the pharmaceutical companies have a pretty good return on investment, probably more than the oil companies.

Anyway, I refuse to blame the oil companies when we, as a country, have full control over how much oil we use and, therefore, how much we pay. If you and I want to pay less to the oil companies WE have control over how much gas we use. Nobody is forcing us to drive a particular car or otherwise dictating how much gas we use.

I am responsible for how much I use and, therefore, directly responsible for how much of my money the oil companies get.

is industry funded. here's a report on them: http://www.sourcewatch.org/index.php?title=Tax_Foundation

Here's a critique of it's methodology: http://www.usatoday.com/news/washington/2006-02-22-ports-foreign-investment_x.htm

Judge their statements accordingly.

pnorman

I'll give them a read.

Here's a personal observation: I'm 76, and have been observing such things pretty carefully since I was in my teens. I NEVER drank Uncle Joe's Koolaid, and have tried to steer clear of specious stuff from "my side" ("left-libertarian"). But only the "FAR-right" (NOT necesarily "conservative") had the sense of "entitlement" and arrogance to LIE with a straight face. That has increased by an order of magnitude in the past 2 or 3 decades.

pnorman

I am capable of operating google myself as are you. Punish the rich, indeed! Lets talk about the 7 billion in royalties they didn't pay, as they continually cheat the people.

I'll not do your research for you & I'll not listen to your tripe defending the oil companies. Good day to you Sir!

Are they holding a gun to your head and forcing you to pump their gas? If not, then how about you take a little responsibility for your actions, hmmm? It really feels good to be in charge and not blame others for your situation.

hmmmm?

seems like you are better off than many of us. I have cut my gas consumption in half in the past 12 months so I don't worry so much about the price of gas or how much profit the oil companies are making. I'm giving less of my money to them and that's what really counts.

Most people can cut it to some extent; drive a more fuel-efficient car, etc.

In the US taking public transportation is not an option for most people.

Not only that, high gas prices have a ripple effect--cause the price of many other things to go up. The economy bites bad enough without that.

THAT is specious! For gas, think "water to drink" (already under privatization/cartelization attack). Or AIR TO BREATHE, fercrissakes! We're living in a world molded largely by Big Oil (and other investors in BushCo). Efficient transportation systems, efficient engines, "Clean" extraction, alternative energy sources, etc etc --- were allowed or barred --- only at the behest of the same good people who funded that so-called Tax outfit. Had they been allowed, we might have had more several centuries "breathing space" to work on the problem. Instead, were not too far from "Peak Oil", and things are becoming highly non-linear. Think CHAOS.

pnorman

I can't believe you quote an article by that tool of the bush-bots. Next time just quote Fox news. We all know how fair and balanced they are, and you obvious preference for RW propagandists would be more evident.

You know the excessive profits the oil companies are making could not be made without the assistance of our lap-dog congress and money hungry bush* administration. Let's see, maybe congress could regulate them, take back those oil subsidies or even make them pay the 7 billion in royalties. I bet their profits wouldn't be so high without good old congress feeding them tax giveaways.

Not to mention how free this wonderful commodities markets is suppose to be that is regulating the price. Let's see we make sure they trade in dollars and every time some Saudi prince threatens to sell in euros, some economists screams how this will ruin the dollar, and the US threatens them. Yeah those "free" markets that PPT rigs whenever the market looks like it will go into a "correction".

Next thing you know, you will be quoting the Tax Foundation.. Oh wait, you did.

Either the content of the article is correct or it is not correct. If the best you can do is attack the source then I can only assume you cannot find fault with the content of the article.

If you don't like oil companies, that's your right. However, your personal dislikes do not change the economic reality that simple supply and demand control the price of fungible commodities. If demand is high (it is) and supplies are limited (they are, albeit somewhat artificially) then the price goes up. It really is that simple, an no amount of government interference will change that very simple principle.

RW sources. They lie and I'm not in habit of having arguments with sources that lie. If they told the truth we could have a good argument over the contents but since they chose to ignore reality and fake the data, it becomes an exercise in futility.

If YOU had read my full post, you would have noticed I did argue some of his false content, though it hurts to do so.

What world do you live in? "If demand is high (it is) and supplies are limited (they are, albeit somewhat artificially) then the price goes up. It really is that simple, an no amount of government interference will change that very simple principle."

Then why does the government continually disrupt the cost of labor? Why did they allow for the hiring of illegals after Katrina? Labor was available. People had no jobs after Katrina and yet this abundant labor pool was bypassed and policies were waived so that contractors could hire illegals. The government continually disrupts supply and demand when it comes to labor costs, flu vaccines, farm products etc....

And I noticed you have yet to address the corporate welfare provided to these honest oil men. Why the welfare if this wonderful supply and demand can not be subverted by government interference? Why doesn't the government just let this simple supply and demand take over and repay these wonderful oil companies? Why demand oil be sold in dollars? Why not let it be traded in Euros?

Big oil is just talking advantage of soaring demand occuring at the same time oil production is starting to plateau. The oil's running out, folks.

which is part of the underlying problem.

Even so, Ben Stein is, shall we say, less than credible in his assertions, and there's been a great deal of overt market manipulation going on for a long time- but especially in the last decade. It will continue, and people will continue to be suckered by people like Stein into thinking that all of the profits and price gouging are due to "free" market mechanisms.

The "personal responsibility" memes especially crack me up- as if demand for petroleum is magically subject to substitution or can somehow become a great deal more elastic for the vast majority of people.

commodities market? No wonder you've been tombstoned.