The whole idea of the free market operating, without regulation by the government, has always been a cornerstone of conservative economic theory. So, it was a little surprising to hear about the pending investigation by the FTC into price gouging by oil companies in the wake of Katrina. The investigation comes at the result of a request by a group of eight Democratic governors.
Of course, the oil industry has gotten its way more than any other, between the votes of Republicans and oil state Democrats. And that includes deregulation. And, with two oilmen as President and Vice President, they have their way at the top as well. Of course, during the 2000 election, when oil prices were as high as $1.30 a gallon nationally, one argument that was advanced was that two oilmen would know a few things about energy policy, so they could get that down if they got their energy bill passed. Well, it's passed, including ANWR drilling, and even before Katrina, the price of gas had doubled (man, what I wouldn't give for $1.30 a gallon). Of course, oil companies have blamed many things for this, especially the fact that no refineries have been built in America for ten years, which they blame on environmentalists. Well, what about that one?
The answer is found in internal memos from Mobil, Texaco, and Chevron from several years ago which all say essentially the same thing. The thing they propose is, to intentionally limit the number of refineries in order to drive up gas prices and then, when it happens, to blame environmentalists.
And it's all right there in their own memos.
And, how has the refinery shortage and the subsequent disasters affected the oil industry? Not a bit. Oil companies have seen their stock prices about double so far this year on record profits. Station owners, at the front edge of customer complaints, typically make only pennies a gallon, and in fact crude oil prices haven't even risen by as high a percentage as gasoline prices have.
This is a perfect example of why deregulation and 'trusting' corporations to police themselves without government oversight is a bad idea.
You actually make reasoned arguments instead of the rhetoric i usually hear from bush bashers. (not calling you a bush basher) It is refreshing to see well thought out, rational, commentary from people who have real facts. i shall return.
ReplyDeleteThere is a very good, sound economic reason why the oil companies have not chosen to build any new refineries here in the past many years.
ReplyDeleteIt has nothing to do with enviromental concerns. The oil companies have enough money and political clout to buy off every enviromentalist in the entire country if they wanted to.
Or they could build in areas where enviromental rules are lax. But they don't.
They have not built any new refineries because their research shows that the world's supply of crude is dwindling. Increased refinery capacity makes no capitalist/economic sense if there will be declining supplies of raw material to refine.
There is a very good, sound economic reason why the oil companies have not chosen to build any new refineries here in the past many years.
ReplyDeleteIt has nothing to do with enviromental concerns. The oil companies have enough money and political clout to buy off every enviromentalist in the entire country if they wanted to.
Or they could build in areas where enviromental rules are lax. But they don't.
They have not built any new refineries because their research shows that the world's supply of crude is dwindling. Increased refinery capacity makes no capitalist/economic sense if there will be declining supplies of raw material to refine.
Sorry about the double post. This is the second time today Blogger has bloggered me.
ReplyDeleteExcellent work Eli.
ReplyDeletebush and cheney are MOST CERTAINLY to blame as all of their conglomerate friends post record profits. It's a game of what the "market will bear" through price fixing & anti trust at the local level and on up (controlled by the corps and owners like duh-bya and darth).
bush did nothing to keep prices (at least) level, but let them soar to line his own pockets. He couldn't be happier and even joked publicly that he "couldn't wave a magic wand" and lower prices.
At best, the prices aren't dropping to pre-2004 levels. At worst, they'll increase even more.
As I said here on August 15- TAKE A LITTLE MORE (and like it).
I, for one, am damn proud to bash on a piece of shit that deserves it!
I hit this two other times:
On April 23 with GASOLINE ALLEY
And on August 25 with The Gas, The Ass And The Torture