So, apparently Oil Companies are price gouging gas prices...

[Dkg]

...For the summer season by lowering the supply that the oil refineries are producing, meaning LESS oil, creating greater "demand", having an excuse to raise gas prices.

EVERYONE with half a brain realizes this, yet nothing is being done.....why??
Since when did this become legal practices?

I'm young and naieve, humor me.

[Kramer]

Its because our government is a fuking disgrace! Totally driven by money. Republicans and Dems both suck! Theyre all phonies.

IMO, there shouldnt even be taxes on gasoline at all. The government is making a fortune on these times.

Gas is a necessity, not a luxury. Everyone needs it, it shouldnt be taxed!

And of course it should be regulated. Then when election time comes, they wonder why there is a sparce turnout. I think the people are getting it, finally. Theyre all crooks! Both sides of the aisle!

[atltrickster1]

...For the summer season by lowering the supply that the oil refineries are producing, meaning LESS oil, creating greater "demand", having an excuse to raise gas prices.

You are right about the current shortage of available refining capacity; many refineries have been experiencing delays in completing recently "scheduled maintenance", not to mention the recent fire at a major plant (can't remember the name of it). Many attribute these "upgrades" and "necessary maintenance" changes as being the end result of disruptions in the global supply chain of crude.

Relatively speaking, crude oil that originates from the Middle East and African countries such as Nigeria is much cleaner and cheaper to refine or process than its North American counterpart. Recent violence in Nigeria (google "Nigeria oil") combined with the increase in volatility of the Middle East has led many refining companies to no longer depend on oil from the region with absolute certainty, thus leading to the need for upgrades in the anticipation that it will be more difficult to process future crude supplies.

Finally, while refineries are processing less crude, this does not translate into a "creation of higher demand." Historically speaking, there has more or less ALWAYS been a higher demand for oil during the summer months due to the fact that it's "driving season" and people must cool their homes/offices.

Since when did this become legal practices?

I'm young and naieve, humor me.

When was it ever an illegal practice? These firms aren't behaving the way they are as a means of punishing the consumer.

Republicans and Dems both suck! Theyre all phonies.

I couldn't agree with you more on this point

IMO, there shouldnt even be taxes on gasoline at all. The government is making a fortune on these times.

Gas is a necessity, not a luxury. Everyone needs it, it shouldnt be taxed!

Taxes, as much as everyone hates them (including me), are necessary as a way of mediating consumer demand for the product by internalizing the many external social costs of driving such as air pollution, increased health costs, etc. (google "the true cost of driving"). In FACT, countless studies have shown that the government isn't taxing us ENOUGH to cover all of these costs, essentially meaning that we all receive a subsidy to drive. Kind of funny how the government says "we are too reliant on oil" when they are the ones responsible for making it that way.

Finally, as a way to go ahead and head off some reactions to my comments, I do NOT work for an oil company nor am I a very political person. I'm simply an economics and finance student in my final year of university and happen to actively keep up with the market and current events.

[tsafficianado]

this topic should rightly be in politics/religion, no?
i think you really just want to vent and don't really want an answer, but here goes anyway.....
first, there are a couple of basic flaws with your premise.
>lowering the supply that the oil refineries are producing, meaning LESS oil, creating greater "demand<
lowering the supply does not increase the demand, supply and demand are two different variables.
>meaning less oil<
There is plenty of oil, albeit at prices considerably higher than eight years ago, the shortage in supply is in gasoline. This is in some part due to the fact that there have been numerous refinery outages this spring due to failures and planned maintenance. The actual root cause is the fact that worldwide demand for gasoline is escalating hyperbolically and the refinery capacity is not keeping pace.....it takes a long time to build a refinery and it costs a lot of money and in the case of almost all commodities the lag in bringing new capacity on line during times of rapidly rising demand is considerable. In the U.S. there is the further constraint that ZERO new refineries have been buiilt in the last 20 YEARS while consumption has spiralled upward. Several of the major refinery concerns, including Tesoro, Valero and Chevron have made applications to build new facilities but ALL have been rejected in large part due to 'environmental concerns' of the same political party that wants to blame 'big oil' for the higher prices and tax them for making a profit. By the way, in the last eight years the price of reactor-grade uranium has increased by 1200% far outstripping the 6-fold increase in the price of a barrel of oil. The price of nickel has increased by a similar amount as has the market price of many strategic metals. These are, like oil, symptomatic of massive increases in demand (China/India etc) that are overwhelming the existing infrastructure. From 1850 to 2000 the U.S., Western Europe and Japan emerged from agrarian economies through industrial to modern economic status.....one fifth of the world's population in 150 years. In the current 30 years HALF of the world's population want to make the same transition. It doesn't take much imagination to recognize that infrastructures and resource reserves that could barely accomodate the pace of the last century will be strained when the transition rate increases by a factor of 12.
Adjusted for inflation the lowest price for a gallon of pump gasoline in the entire history of the US occurred in 1999, just 8 short years ago. At the same time Americans were shunning efficient vehicles for SUVs (You know, STATUS utility vehicles) with seating capacity for eight for their solo drives to their job forty miles from home through deadlocked city traffic. The problem is consumers and to a slightly lesser degree their moronic, myopic and ostrich-like legislators. Last year when the price of gas topped $3 there was a huge media frenzy over hybrids but as soon as the price dropped below $3 Toyota couldn't give them away.
America has about 6% of the world's population and consumes about 24% of the world's supply of fossil fuels. Think that can go on idefinitely? The Chinese demand for personal vehicles is miniscule but in fifteen years it will be the largest car market in the world and when that day comes you will REALLY be howling about the price of gas because it will be $10 a gallon. Any moderately intelligent person could have seen this coming forty years ago and NO Congress in the last forty years has done the first solitary thing to address the issue. We have continued to drown our addiction for oil, we have continued to pour trillions of dollars into the coffers of barbaric herds of post-neanderthal civilizations who want to kill us, we have placed ourselves on the brink of economic collapse with the resulting trade imbalance and we have done nothing to postpone the energy apocalypse we now face.
What do the great minds in Washington want to do? 'Windfall profit taxes', of course. It's o.k. for Nike to spend four dollars manufacturing a pair of sneakers and then sell them to your kids for $175, it's o.k. for Coke to put 30 grams of sugar and 12 ounces of water in a bottle and sell it to your kids for 50 cents, but heaven forbid Exxon Mobil making a measly 8% profit margin after spending trillions of dollars exploring and building oil resources and then charging almost as much for a gallon of oil that you gladly pay for a gallon of bottled water. Absurd.
Price gouging? The federal government and various states have intiated over a hundred inquiries and investigations into allegations of price gouging in the oil/gas industry in the last fifteen years and NONE of them, ZERO, Zilch, has produced any evidence supporting those contentions.
Regulation? Yes, good plan. Thee is no better way to increase the cost of something exponentially than to let the federal government start regulating it.
Do something about it? Sure....learn something about the issues and support candidates who have a clue (Hillarity and DuhDorgan are perfect examples of the antithesis). Ride a bike, get a hybrid, use public transportation, walk, park that SUV, be a part of the solution instead of making noise.

[Dkg]

tsafficianado, no I am looking for answers, but I'm not looking for excuses for these outrageous prices. you can't tell me that these ridiculous price hikes are unavoidable or simply due to Americas oil being less pure, refinieries outages, increased summer travel, or the fact that America uses a lot of resources. There is PLENTY of oil to be used currently. They could pump and buy TONS of oil to be stored so that there would be less of a demand but they aren't going to do that b/c then they couldn't charge as much.

These guys are making, hand over fist, record breaking profits year after year. I'm talking BILLIONS. and they aren't paying that much more for oil right now than there were last year. Refiniery outages or not, the math just does not add up

I'm seriously begining to think that Bush's 8 year term was nothing more than ploy to secure more oil money for His and Dads buddies.

[atltrickster1]

Dkg,

You are correct in saying that by increasing the available supply of gasoline that prices would go down. However, the key element in this situation is the fact that the United States currently does not have the capacity to do so due to the lack of refining capacity (unless the government cuts into U.S. strategic reserves, which are back to their normal level by the way).

In terms of the record breaking profits that oil companies are making (due to the huge demand for oil products and high worldwide crude prices), yes, it is emotionally infuriating to think that these organizations are benefiting by "punishing" us with high prices (which as was stated previously, the result of free market mechanisms, not an attempt to "fix prices"). However, the fundamental goal of ANY private firm is to be profit-maximizing; without generating a profit, what reason do they have to stay in business?

Most importantly, one should consider the inflation adjusted price that consumers have paid for gasoline over the past several decades. In real terms, the price of gasoline has risen VERY LITTLE considering the dramatic increase in worldwide demand for it.

Trust me, as much as find fault with MANY of the policies advocated/pursued by the Bush Administration, I do not believe that this issue can be legitimately attributed to their lack of governmental competence

[tsafficianado]

Dkg...why are you complaining about the profits of oil companies? Are you a capitalist or a Marxist? We (US) live in a capitalist society and, as atltrickster pointed out, it is a primary objective of a corporation to maximize profits. The major oil companies make profit MARGINS, the critical metric, of about 8% currently and have done far less in the past. The expenses involved in o&g exploration are enormous, the costs for drilling and extracting and refining are high and going higher, it is an EXTREMELY capital intensive business. There are thousands of companies in dozens of other sectors that make MUCH higher profit margins than the oil companies without the high cost structure or the business risks but you aren't complaining about them....why is that? The oil majors are making huge amounts of money in large part because they sell a LOT of product. The statement that 'big oil' is making record profits year after year is, simply, not accurate. There have been many years when their profit margins were much lower than they are currently. Why would you single out one sector of companies that make REASONABLE profit margins yet not complain about Nike or CocaCola or Pepsi or Altria or some of the other hundreds of companies with MUCH higher profit margins?
There is PLENTY of oil to be used currently.
>>They could pump and buy TONS of oil to be stored so that there would be less of a demand but they aren't going to do that b/c then they couldn't charge as much.<<
Again you suggest that increasing supply will reduce demand, when this is in practice the opposite of reality. Demand is a function of consumer choice. Increasing supply will. all else equal, reduce price and elicit higher demand. That is why, in the nineties when oil/gas prices were historically low in terms of REAL dollars, people demanded higher horsepower and these silly SUVs and abandoned any concern about conservation. In Europe for example the price of pump gasoline has long been MUCH higher than in the US and for the most part Europeans drive much smaller, more efficient vehicles. Americans are on the whole resource pigs and when supply is constrained we pay the price, which is AS IT SHOULD BE.
Personally I ride motorcycles and I estimate that I used 200 gallons of gasoline in 2006, about a quarter of the national average. Other than lashing out without regard for the facts what have YOU done to reduce the impact? Public transportation, walk, ride a bike, carpool, more efficient vehicle, set back your thermostat in winter or raise it in summer? The rants of misguided liberal politicians about windfall profit taxes, rationing and regulation are not going to fix the problem. 300 million Americans complaining about the price of pump gas without regard for the facts is not going to fix the problem. 300 million Americans taking some personal initiative to reduce their own consumption is the ONLY thing that will reduce the problem, barring some technological miracle.
The simple fact is that the only thing that will make the public alter their behavior and reduce consumption is the pain at the pump, that is how economics works. Legislative attempts to temper the process only serve to interfere with the market forces that will eventually compel people to start making wiser decisions about energy resources that are limited and dwindling.

[specialk]

You can't look to the government for help..............on any issue, they are dysfunctional. We need to do it ourseleves. We need to make our problem, big oils problem. what do you think would happen if nobody bought Exxon/Mobil products anymore???...Now they have a big problem, so let E/M figure out what to do, when they aren't selling product anymore, then you'll see action.

[bassman2546]

I have a simpler theory.

George W. Bush, the oil tycoons and the auto industry are all working together. Bush is a dictator who wants his billiions in oil (hence why I'm sure he has Bin Laden on speed dial). He wants the excessive tax dollars from the citizens of America. Why no one has assasinated this guy is beyond me. What did Lincoln and Kennedy do that was so bad.

The auto industry is quite capable of producing a high-efficient gas vehicle for an economical price. Because they are working with the Oil industry they choose not too. You can buy a highly fuel-efficient car. BMW makes one. Yes and it costs upwards to six digits to buy it. Hence by buying this vehicle you've already given in to paying for your excess fuel up front by pumping out an extra 60-70g's for the vehicle. What a great concept!

Don't expect a new government to be any different. The next President may not have the personal greed of a Bush but have you ever heard any government, once in power, say they will do something about the excessive gas prices? No, and they never will to lose all those tax dollars. The only time you will hear a political party be in favor of price cuts at the pump is when they are gathering votes for the next election. Beyond that, they could give a flying fuck about cutting prices.

Get on your bikes and ride!

[whatislove]

Appreciate this post, well written and true except I'm not understanding the foreign aid part.

this topic should rightly be in politics/religion, no?
i think you really just want to vent and don't really want an answer, but here goes anyway.....Think that can go on idefinitely? The Chinese demand for personal vehicles is miniscule but in fifteen years it will be the largest car market in the world and when that day comes you will REALLY be howling about the price of gas because it will be $10 a gallon. Any moderately intelligent person could have seen this coming forty years ago and NO Congress in the last forty years has done the first solitary thing to address the issue. We have continued to drown our addiction for oil, we have continued to pour trillions of dollars into the coffers of barbaric herds of post-neanderthal civilizations who want to kill us, we have placed ourselves on the brink of economic collapse with the resulting trade imbalance and we have done nothing to postpone the energy apocalypse we now face.