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Saturday, July 29, 2006

Messenger defends Big Oil

Todays Messenger InBrief column announces an ID-theft meeting hosted by Rep. Paul Ryan. Shouldn’t spokesmen for the negligent insurance companies and military officials be hosting this along with the US Post office inspectors to reassure and tell us how we can avoid being ripped off? Why Ryan? On whose behalf is he speaking for? Am I the only one who thinks this? Maybe it’s just me.


Rep. Judy Robson submitted an article to the Janesville Messenger about how our private wealth is being confiscated at the gas pump, and offered her ideas on what can be done about it. The Mess editorial would not let her go unchallenged and proceeded to defend Big Oil with what they claim are relatively modest profit margins of 8% or 9%. I’m not going to get into vertical corporate economics, but those profit margin percentages are meaningless to the average American. What we hear about are the windfall $5 to $10 billion profits that are posted quarterly by Big Oil companies. What really hurts is that the Bush war has provided the perfect fear factor to induce price manipulation in this market. It’s called price gouging, it is obscene and illegal, but difficult to prove. I don’t care if they claim their profit margins are one percent or fifty percent, the profit margin defense is bogus.

If I learned one thing from Wal-Mart’s success it is this. Most American consumers don’t give a rats-ass about where (China) something is made, or how (sweatshops) it was made. They want low prices and a good value, and they want the same thing in gasoline. Will drilling in ANWAR lower the price of gasoline at the pump? Absolutely not and most Americans know this, but Bush, Ryan and the Republicans see an opportunity here. I would even bet on it that the price of gasoline would go up.

Meet the Press excerpt:
MR. RUSSERT: But you could make less profit and lower prices at the pump if you chose to.
BIG OIL: Not, not in, not in an open market. Because if, if you reduce your price in an open market, demand goes up and you, you, you run the risk of running out of, of oil and gas. So I think the issue here is not, is not price issues. The solution here is to look at how we can increase supplies.


In other words, Big Oil has taken it upon themselves to establish the price of gasoline high enough to force some level of conservation on Americans. That they are reaping huge profits at our expense is incidental. According to these profiteers, regulations imposed by the government are always bad, but prices dictated by corporatists to regulate consumption are a good thing.

No question, the wild west economics promoted by so-called conservatives along with government hand-outs to corporations are killing us.

20 comments:

Anonymous said...

If Judy Robson is so concerned about people spending all their money at the gas pumps. Maybe she should do something about it. She needs to stop blaming everyone for this. She needs to take a stand at the minimum mark-up law that is put on gasoline. She can actually help us out at the pump if she put a stop to this dumb law. The law is hurting the taxpayer. The people Judy cares so much about. I'm sick of all the politicans saying they feel our pain. Well then do something about it.

Lou Kaye said...

Perhaps I'm missing something here, but the 8 to 9% profit margins that Big Oil claims to be working with has absolutely nothing to do with the minimum mark-up law. The windfalls are not on the station owners books.

Anonymous said...

The minimum mark-up laws have a lot to do with the price of gasoline. If they didn't have this law we would be paying less for gasoline at the pumps. It would put competition back into the marketplace. We would have gas wars again. The price of oil is simple economics the demand is high and the suppy is low the price goes up.

Lou Kaye said...

But you see, I don't believe we have classic laws of supply and demand on gasoline. Big Oil sells for the highest price the market will bear, not the lowest. And their objective is to increase supplies by inducing conservation. The high prices are artificial and their wild profits prove it. If they removed the minimum mark-up, the savings to consumers would be minimal and hurt those who earn the least in this sector.

Anonymous said...

We can remove the minimum mark-up and all the state and local taxes too. We'll wind up with gravel roads, tollways and fewer gas stations. The oil companies will still be raking in the billions and laughing all the way to the bank.

Lou Kaye said...

You bring up a valid point. The minute someone complains about high gasoline prices and excessive corporate profits, others twist it around by pointing at government imposed taxes and mark-up laws. Sure, mark-ups and taxes based on percentages can become excessive and need some tweaking during these (Bush economy)inflationary times, but Big Oil admits to raising prices as a tool to force conservation. We pay the prices because we have no other choice....yet.

Anonymous said...

the minimum mark-up laws have nothing to do with gravel roads. The law was put into place to protect the mom and pop pumping stations so, they can compete with the larger stores. Well, that's all fine and dandy but, the only people this is helping is the large gas stations. They (the government) is telling the store owner what they have to sell gasoline for. That hurts the consumer not the business. Let the business compete in the open market. The lawmakers could do this but they turn the other cheek when confronted with it. We could also do away with all the boutique blends of fuel make maybe thee blends instead of 23 blends. This would get the product to the station quicker instead of having to switch over blends all the time. Maybe we could actually start building a refinery to keep up with the demand of gasoline.

Lou Kaye said...

Eliminating the minimum mark-up could/maybe/perhaps result in fewer gas stations, creating an economic environment(monopolies) that is bad enough already. I don't think consumers in general have a problem with the gas station owners turning a profit and so far all the deregulation that has taken place in electric energy and communications has resulted in higher prices. Psychologically, people would accept paying $3+ a gallon much more if Big Oil was not raking in record billions per quarter during wartime. That's the bottom line, regardless of 25 cents/gallon we could gyp the station owner out of.

Anonymous said...

They are making big profits because of the world demand is higher than ever. Mobil/exxon is the biggest company in the world. They are in the free market and are allowed to make money. The owners of this company are people like you and me. Stockholders. I never understood why people think it's bad to make money.

Lou Kaye said...

Obviously, I would agree that world demand for oil is rising, but the volume consumed by Americans has gone down slightly during the same period according to some charts I've seen recently. Given that, I cannot ignore the coincidence of the timing with the turmoil in Iraq, which I also happen to believe was a war of choice. The free markets are able to base their prices on speculative fear. On a small scale at the retail level here, they call it gouging and publicly humiliate the little guy pumping gas if he tries to gain financially from the fear. On the grand scale with OPEC, stock and commodity trading its conveniently called free enterprise/markets. Its the same horse.
Just mention a chance of a hurricane in our gulf or a fractured pipeline and oil pops a dollar or two a barrel on a global scale. Its B.S.
Dropping the boutique blends to save a few pennies a gallon at the expense of deregulating clean air laws takes us nowhere. The cost of the blends is a small price to pay for a healthier environment and it will have no impact on the cost of a barrel of oil.
Right now, the only thing that can bring it down is a major pull-out of forces from the mid-east, probably to $55/barrel.
I have a question for you. Does Big Oil make their profits on the actual oil or on the barrels?(infrastructure/labor to bring the oil to market)

Anonymous said...

Oil is a future and is traded that way same as natural gas. That's the way it is. it's all based on speculation. We need to start building refineries easing up on some regulations that make it impossible to open a refinery. It take a company 15 years to get a refinery up and running. No wonder nobody wants to open on. Who can live without an income for 15 years? I believe that the oil companies should put their profits into building these refineries and exploring oil reserves closer to home. I don't believe if we pulled out our troops the price will drop that much.

Anonymous said...

Ordinary people own the oil companies. If you have a problem with the price of gas. Invest in the companies and ease the pain a little bit. Because if they make money you will make money.

Lou Kaye said...

One oil company raked in $10 billion dollars in profits in just one quarter, lets see...add..then multiply, yep,2+2=20,000 people, that's how many ordinary people you can employ at $50,000/year for ten years without turning a profit. Thats what you could do with $10 billion, that is incredible.

Big Oil doesn't want new refineries and using strict pollution laws as a reason is a matter of convenience for them, they love the excuse. They said they don't want overcapacity because it will drop prices, thats not what they want to do.

I really liked the investment approach to ease the pain, you send that in to slipperyjokes.com

Anonymous said...

Do you have any idea how much the federal government makes? Why not whine about that?

Lou Kaye said...

In profits? I had no idea the Federal government "made" money. The last thing I heard was that the Federal government was in the hole by at least $296 billion and that is just for this year, thanks to your "ordinary" president.

Anonymous said...

The government makes all kinds of money. The deficit is just a number on a piece of paper. Does it really effect your life? When we had the so called surplus I never saw any of the surplus. It didn't change the way I lived. The deficit doesn't effect my life either. Have you seen what the government has brought in when the taxes were cut? It seems the government deficit is shrinking. The government is bringing in more taxes. People have more money to spend and they tend to buy which means the are paying more in taxes.

Lou Kaye said...

Are you George W. Bush? You sound exactly like him. When he went to look at the governments debt it owes to Social Security, he said it was nothing but a filing cabinet filled with worthless paper i.o.u's.
This is a whole 'nother can of worms from the wealth that is being confiscated at the gas pumps.
I'm not going to blame government taxes for Big Oil's deliberate price gouging, but I'm for some form of regulation when it comes to windfall profits. Yeah, who's to say how much is too much.

Sure, at times when you can cut taxes, more money is spent by consumers, but I believe there is a fine line to balance this with the annual deficits and Bush and his conservative Congress crossed it. We might not feel directly now, but someone is going to pay dearly for it. Who cares, right?

Anonymous said...

The alaskain pipeline is broke and big oil is responsibele. why should the government open the reserves.......its big oils problem, where are their reserves?
If government keeps oil and airlines in business they may as well take them over

Anonymous said...

The government mandates oil. That's why it's THEIR problem.

Lou Kaye said...

The corporation mandates profits.
That's why losses BELONG to the government.

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