Price gouging at the pump.
If you pay attention to the price of crude oil and the price of gas, you will quickly see that they are independent. Increasing crude prices are an excuse to raise the price of gas, but plummeting crude prices never decrease the price of gas by nearly the same magnitude. Crude is only one factor that goes into the cost for producing gas; this means it is only a fraction of the cost, therefore an increase in the market price of crude should have a fractional effect on the increase of gas. This does not happen, however. A 5% increase in crude results in a 20% increase in gas. It's backwards.
If true market pressures were involved, the price of gas would be driven down by competition. Instead, competition is actually driving the price of gas up. Why? Collusion and price fixing. The petroleum companies get away with antitrust violations on a daily basis. The public does nothing, the Justice Department does nothing. The JD pursued Microsoft for "acting like a monopoly," which is not really collusion or price fixing. They were just really successful in what they do. The petroleum companies, however, act like a monopoly all the time and they get off scott free. The JD, under any administration, has no interest in doing anything about it, and the citizens feel helpless to do anything.
Further, and this is a crude (pardon the pun) estimate, but you get the idea:
Suppose you buy a barrel of crude oil today. It would cost you about $70. About 50% of that, after refinement, is gasoline. The other half is made into a plethora of other products. So, about $35 goes into the cost of gasoline. You get about 20 gallons out of this, which comes to a cost of about $1.75 per gallon. The markup on this is about 50%. Some of that (actually a lot) goes to all kinds of taxes (another reason for the Fair Tax), but the rest is a huge profit. Many, many companies would love to make that kind of margin over their cost of raw materials. These refineries aren't just making money on this, but the other half that is not converted into gasoline. They are marking those fractions up even more, all while telling us that they make nothing.
The idea that increased demand is driving this is also a crock. This principle is based on short supply. The supply so far is not even close to short. It will be if we don't build more refineries, which liberals try to prevent and petroleum companies aren't really excited about because they want another excuse to raise prices. The problem is that as long as supply far outpaces demand, which it is doing (notice no lines at the pump, no sold out pumps?), then there is no market pressure driving up price. There is only lack of market pressure to drive prices down, and lack of citizen pressure to bring the Department of Justice to do something about the antitrust violations by the petroleum industry.
And, to dispell one more straw man argument: Neal Boortz claims that their profit margins are still about the same, so there is no price gouging going on. While true that their profit margins are about the same, that doesn't dispell the price gouging; it has always been going on to the same magnitude. It's just more painful to us now.
If true market pressures were involved, the price of gas would be driven down by competition. Instead, competition is actually driving the price of gas up. Why? Collusion and price fixing. The petroleum companies get away with antitrust violations on a daily basis. The public does nothing, the Justice Department does nothing. The JD pursued Microsoft for "acting like a monopoly," which is not really collusion or price fixing. They were just really successful in what they do. The petroleum companies, however, act like a monopoly all the time and they get off scott free. The JD, under any administration, has no interest in doing anything about it, and the citizens feel helpless to do anything.
Further, and this is a crude (pardon the pun) estimate, but you get the idea:
Suppose you buy a barrel of crude oil today. It would cost you about $70. About 50% of that, after refinement, is gasoline. The other half is made into a plethora of other products. So, about $35 goes into the cost of gasoline. You get about 20 gallons out of this, which comes to a cost of about $1.75 per gallon. The markup on this is about 50%. Some of that (actually a lot) goes to all kinds of taxes (another reason for the Fair Tax), but the rest is a huge profit. Many, many companies would love to make that kind of margin over their cost of raw materials. These refineries aren't just making money on this, but the other half that is not converted into gasoline. They are marking those fractions up even more, all while telling us that they make nothing.
The idea that increased demand is driving this is also a crock. This principle is based on short supply. The supply so far is not even close to short. It will be if we don't build more refineries, which liberals try to prevent and petroleum companies aren't really excited about because they want another excuse to raise prices. The problem is that as long as supply far outpaces demand, which it is doing (notice no lines at the pump, no sold out pumps?), then there is no market pressure driving up price. There is only lack of market pressure to drive prices down, and lack of citizen pressure to bring the Department of Justice to do something about the antitrust violations by the petroleum industry.
And, to dispell one more straw man argument: Neal Boortz claims that their profit margins are still about the same, so there is no price gouging going on. While true that their profit margins are about the same, that doesn't dispell the price gouging; it has always been going on to the same magnitude. It's just more painful to us now.
posted by Justin at 8:39 AM
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