Posted on 07/23/2007 6:17:52 AM PDT by Daffynition
The U.S. House of Representatives recently passed legislation instituting penalties of up to $150 million for companies and up to $2 million and 10 years' imprisonment for individuals found guilty of gasoline "price gouging."
But the real gouger driving up gasoline prices is not the private sector – it is our government.
To "gouge" means to extort, to take by force – something that oil companies and gas stations have no power to do. Unlike a government, which can forcibly take away its citizens' money and dictate their behavior, an oil company can only make us an offer to buy its products, which we are free to reject.
Because sellers must gain the voluntary consent of buyers, and because the market allows freedom of competition, oil and gasoline prices are set, not by the whim of companies, but by economic factors such as supply and demand.
If oil companies could set prices at will, surely they would have charged higher prices in the 1990s, when gasoline was under one dollar a gallon.
Because oil companies and gas stations cannot set their prices arbitrarily, they must make their profits by earning them – by efficiently producing something that we value and are eager to buy. In so doing, they assume great risks and expend enormous effort.
Over the decades, oil companies have created a huge infrastructure to produce and distribute gasoline by investing hundreds of billions of dollars in prospecting, drilling, transporting, stocking and refining oil.
In the absence of political factors like the 1973 OPEC oil embargo or the Gulf wars, the net effect of oil companies' pursuit of profit has been to drive the price of oil and gasoline, not up, but down.
The price of a gallon of gasoline (in 2006 dollars) fell from $3 in the early 1920s to $2.50 in the 1940s to $2 in the 1960s to under $1.50 in the 1990s.
This downward trend is all the more impressive because it required the discovery and exploration of previously inaccessible sources of oil and because it persisted despite massive taxation and increased government regulation of the oil industry.
When we see the price of gasoline today, we should not accuse oil companies of gouging but rather thank them that prices are not much higher.
The true culprit that we should condemn for driving up prices is the government, which has engaged – with popular support – in the gouging of both the producers and consumers of gasoline.
Federal and state governments have long viewed gasoline taxes as a cash cow. In 2003, for instance, when the average retail price for a gallon of gasoline was $1.56, federal and state taxes averaged about 40 cents a gallon – which amounts to a far higher tax rate, 34 percent, than we pay for almost any other product.
(Contrary to popular belief, gasoline taxes do not just pay for the roads we drive on; less than 60 percent of the gas tax-funded "Highway Trust Fund" goes toward highways.)
Along with high taxes, environmental regulations – justified in the name of protecting nature from human activity – have dramatically increased the production costs, and thus the price, of oil and gasoline.
The government, for example, has closed huge areas to oil drilling, including the uninhabited wilderness of ANWR and the out-of-sight waters over the Atlantic and Pacific continental shelves. This, of, course significantly reduces the domestic supply of oil.
The government also has passed onerous environmental regulations that make it uneconomical for many old refineries to keep producing (50 out of 194 refineries were shut down from 1990 to 2004) and discourage new refineries from being built (no major refinery has been built in the last 30 years).
Regulations such as these push the surviving refineries to operate at almost full capacity, creating a situation where any significant reduction in the production of some refineries (e.g., from a hurricane) cannot be compensated by increased production in others.
Exorbitant spikes in prices, which many attribute to oil companies' "gouging," are actually caused by government constraints.
If we want to stop the irrational forces that have been driving up the price of gasoline and our cost of living, we must demand that our elected officials eliminate the regulations and excessive taxes that restrict the producers of oil and gas.
It's past time to stop gouging oil companies – and ourselves.
Your socialist class envy gene is rearing its ugly head I see.
First, 2 of the 5 are not US companies. BP is British and Shell is Dutch. Chevron dropped the Texaco name in a previous year.
ExxonMobil made $9.28 billion 1Q07, not $158.5 billion.
Exxon Mobil Corporation 1Q’07 Press Release
http://library.corporate-ir.net/library/11/115/115024/items/242049/1Q07_Earnings_Press_Release.pdf
Shell made $7.281 billion 1Q07, not $108.5 billion.
Royal Dutch Shell’s first quarter 2007 results
http://www.shell.com/home/content/investor-en/quarterlyresults/2007/q1/q1_2007_results_03052007.html
BP made $4.664 billion 1Q07, not $89.2 billion.
BP Group Results First Quarter 2007
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_first_quarter_2007_results.pdf
Chevron made $4.715 billion 1Q07, not $60.9 billion.
Chevron Reports First Quarter Net Income
http://investor.chevron.com/phoenix.zhtml?c=130102&p=irol-newsArticle&ID=992152&highlight=
ConocoPhillips made $3.546 billion 1Q07, not $46.9 billion.
ConocoPhillips Reports First-Quarter Net Income
http://www.conocophillips.com/newsroom/news_releases/2007+News+Releases/042507.htm
So the initial claim is overstated by 1,546%. Do you really expect people to take the rest as truth?
If so, then it's the MOST violated rule of the forum. So, we can expect to see you on practically every thread from this point forward reminding your fellows that this is a no-no. You'll be pinging the mods in defense of trolls on a regular basis, regardless of their stance, right? I'm sure you've never lashed out at the retreads or noob trolls? Or do you just lash out when you recognize a particular retread? Thanks for agreeing with my original point though. Blackbird.
There's nothing socialist about me wanting to keep my hard earned money in my own pocket rather than your favorite vehicle of re-distrbution. Project much? Greed is not a Conservative trait. Blackbird.
Thanks to to this wonderful information age we now live in, your voice has been heard by the oil company owners. This week I sold off the last of my oil company stock. I won't be making any more oil profits, and those in the business will be laying off oil workers.
If you get a chance, please let me know if how this is going to put money into the pockets of those "working people" you were referring to.
That's what's great about this forum, it's the only place where we're allowed to chat with people on the far left. Sure, we can pick those rants on lots of other sites, but the other's moderators don't seem to want any of our part of the conversation.
Since you oil company defenders complain about how little profit they make, why did you hold their stock for so long?
"Since George Bush became President in 2001, the top five oil companies in the United States have recorded profits of $464 billion through the first quarter of 2007:"
Who is miquoting whom?
How much should they have made? How much less profit would end your whining?
You should direct your question to these people:
http://www.citizen.org/cmep/energy_enviro_nuclear/articles.cfm?ID=13912
Sorry, I should have pinged you to this post.
http://www.freerepublic.com/focus/news/1870199/posts?page=209#209
Please point out which of their statistics is incorrect. I’m sure we would all like to know. Just exactly how much profits did the oil companies make between January 20, 2001 and now? And at the same time, how much did the consumer pump price increase between January 20, 2001 and today? Please tell us.
Poor argument. It is not even in the apples and oranges category. However I’ll agree to letting them make what they can. Entertainers and those in sports are absolutely unnecessary, yet make big bucks. Same principal here. Its our fault because we do what we want to do, cost be no matter. We could all drive less, use vehicles that consume less fuel, but no we want a SUV etc. Anyway we are no longer customers, we are a nation of consumers. Until we again be come customers we will just have to pay what “they” want.
We've got a misunderstanding here. I'm like you, and I saw the need for cheaper gasoline. For me, it's not enough to just say that it's all someone else's fault. I took action and I held down the price by selling it at a price that was lower than other people's prices. For this good deed I was very richly rewarded. Now you said you were "sick and tired" of people like me making a lot of money so I've stopped making oil profits.
I still don't see how my letting the prices go higher is going to help anyone.
You have yet to explain how making money in business and investing are greed. It's the American way.
So you don't agree with them? Then why post and defend their screed?
Which is the fair market price, right? If someone could do it cheaper and take more market share, they would. It's self-regulating, like all markets.
While driving I-65 N, I listened to a Chicago talk station. Apparently BP in Indiana wants to expand refinery capabilities. Illinois says, “Not too fast at the expense of polluting Lake Michigan”. Whatever the BP proposal, Illinois says that it won’t happen.
The operative word being "expand", as in "not build new".
For decades one of the big reasons for pushing expansion instead of building new has been all the environmental hassle; from what you're saying we may be seeing even the expansion route getting shut down too.
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