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Pump Prices Tell The Story | Oil Watchdog

Pump Prices Tell The Story

Thu, Feb 28, 2008 at 1:46 pm

    Pump Prices Tell The Story

    Arkansas Democrat-Gazette (Little Rock, AR)
    February 28, 2008

    by Mike Masterson, Staff Columnist

    Editorial: Pump Prices Tell The Story

    I don’t know diddly about how the oil industry legally siphons
    billions in profits from captive customers while the nation’s oil-based
    economy teeters near calamity, but my ignorance never stopped me from
    having an opinion.

    In Northwest Arkansas, where the cost of gas and diesel fuel
    ranks first in the state, gasoline prices had skyrocketed from $2.65 a
    gallon at the pump five months ago to as high as $3.19 last week, and
    diesel fuel had hit a record $3.45 a gallon. All spelled more bad news
    for the nation’s ailing economy.

    These increases could not possibly be the result of
    price-fixing among the five major oil corporations that now control a
    majority of U.S. refineries as well as retail fuel supplies. Besides,
    that popular U.S. Congress that we all
    trust assures us that it examined Big Oil’s endless price hikes and
    found no evidence of anything untoward.

    While I lack credentials as a fuelpricing guru, I’m not bad at
    spotting patterns. Quoting a passage from the Oil Watchdog blog, "It’s
    like that old saying, `Who are you going to believe, me or your lying
    eyes?’ Anyone who can see the numbers on the gas pump knows who’s
    lying." One such pattern: A month before last Christmas Day, gas prices
    dropped to $2.84, the lowest they had been in months. I thought at the
    time how giving it was of the oil companies to allow Americans several
    more cents during the Yuletide season to spend on something other than
    getting to and from all the stores. The tycoons, who boast to us of one
    record industry profit after another, seemingly took mercy on all the
    lesser merchants who are not allowed to hold every one of their
    customers and the
    entire economy captive.

    But on Dec. 26, they began increasing until they reached at
    least $3.09 by late February. (Two weeks ago, the price of gasoline at
    most Fayetteville stations was $2.879 a gallon.) To Americans who
    believe this Christmas price fluctuation was coincidental, I say that
    as our dollar’s value declines, as prices for raw commodities
    skyrocket, as the mortgage crisis intensifies and as record diesel
    prices raise the cost of everything delivered by trucks, you keep
    on pumpin’ and grinnin’. Your elected representatives will grin with
    you as they remind us once again that runaway profiteering by a
    monopoly industry is legit.

    The nonpartisan, nonprofit Foundation for Taxpayer and Consumer
    Rights, or FTCR, feels otherwise. It says the record profits reported
    by ExxonMobil ($40.6 billion) and Chevron ($17.1 billion) must spur
    Congress to finally control the unregulated energy market. It says that
    while ExxonMobil rakes in the largest profits by any corporation ever,
    American families and our economy are paying through the noses for the
    oil companies’ endless and unprecedented windfall.

    One report I read said that Exxon-Mobil’s retiring chairman alone got $398 million in 2006.

    In a recent news release, Judy Dugan, FTCR’s research director,
    said the total 2007 profit of just the three U.S.-based major oil
    companies was $70 billion. Even as the federal government is about to
    shell out more than $100 billion to families as an economic stimulus,
    she said, "Americans are deeper in consumer debt than ever in large
    part for high energy costs. If the stimulus mainly pays credit card
    debt racked up at the gas station, it won’t stimulate anything." These
    enormous profits, she noted, "come at the cost of an economy tipping
    into recession." The whole mess tells me that oil pricing, not supply
    and demand in a free market, is what dictates your cost and mine. Fuel
    prices at the pump no longer jump by a penny. They leap overnight by 10
    times that at every gas station. But why profit by $10 million
    overnight when you legally can make a cool $60 million or $70 million?
    It’s not illegal to maximize one’s profits in America, even though your
    unique product provides the very foundation of an entire economy.

    I heard on the news that there are no current problems with the
    supply of oil (whose cost is now at more than $100 a barrel). I also
    read that the nation’s energy infrastructure is aging, which is partly
    to blame for these crippling prices. Are we now to believe that this
    vital industry doesn’t expect its limited number of refineries to be
    routinely maintained and updated in the face of easily anticipated

    In recent years, I’ve been told by a friend in the business
    that the primary culprit was nameless, faceless "oil speculators." More
    recently, several refinery fires and natural disasters have been blamed
    for higher pump prices. Hey, is this a great
    less-of-our-vital-product-for-you-means-more-profit-for-us industry or

    Yeah, I readily concede that I have devolved into a skeptical
    cynic who today believes his lying eyes rather than the calculated
    blend of vague explanations from well-oiled PR execs or any others with
    agendas. I also believe that an industry raking in such obscene
    world-record profits at the expense of our economy’s well-being badly
    needs to examine its level of national gratitude and morality.
    Staff columnist Mike Masterson is the former editor of three Arkansas daily newspapers.

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