Shell Oil and British Petroleum announced on Tuesday world record profits of $17 billion for the first 3 months of 2008. $17B PROFIT. Their profits increased by 25%. On Thursday, Exxon Mobile announced their quarterly profits at $10.9 billion. Almost comically, they were disappointed that they didn't have a greater increase than their 17 percent jump. Far be it from me to begrudge another person of their lawfully gained earnings. However, their manipulation of gas prices is very flirty with the unlawful and absolutely personal with unethical. If we were fighting in WWII instead of the War in Iraq, both of these companies and the others in collusion with them would be brought up on charges for war profiteering. For capitalism to work, business needs to be beneficial to both the buyer and the seller. If the balance leans too much in one direction, the scales will break. These few companies are bleeding our economy and compressing more wealth than ever experienced in world history. They do it with complete disregard for the rest of the country.
What's going on today is the quietest, but also the largest redistribution of wealth that the world has ever seen. Gas prices have risen steadily without relief for several years. The oil industry through companies and traders manipulate the price of oil without actually physically buying the product, raise the price of gas according to that speculation and the cash is fast tracked to the bottom line. It is a inventory-less process and foolproof way of raking in billions. This is happening totally under the nose of federal regulators and government officials who pretend that they have no idea what's going on and how to stop it.
What's going on today is the quietest, but also the largest redistribution of wealth that the world has ever seen. Gas prices have risen steadily without relief for several years. The oil industry through companies and traders manipulate the price of oil without actually physically buying the product, raise the price of gas according to that speculation and the cash is fast tracked to the bottom line. It is a inventory-less process and foolproof way of raking in billions. This is happening totally under the nose of federal regulators and government officials who pretend that they have no idea what's going on and how to stop it.
Surely, this drain of American dollars will be felt in the years to come. Every time quarterly profits are announced, another benchmark is set. Oil companies have broken more records than Jim Thorpe. Inrespective of their drain on the economy and historic profits, we still give federal subsidies and special tax breaks to these companies and they have the conscience to defend it. On the backs of the American people, these companies have redirected more American wealth than any in history and we are still subsidizing them. When the House of Representatives passed a bill to remove these subsidies to finance the development of alternatives to oil, President Bush threatened to veto the measure. He says they shouldn't be singled out. They are making record profits under a slow economy with every industry struggling because of them, and Bush doesn't want to "single them out". Some people think Bush's coziness with the oil companies are behind these prices.
Meanwhile, the rest of our country is struggling through the closest thing to a recession we've seen in years. Almost every industry from the airlines (national commerce), to the trucker drivers(interstate commerce) to the cab drivers (local commerce) throughout the country has been negatively impacted specifically because of gas prices. Of course, this means they have to raise their price to consumers across the country. Food prices are up almost across the board. Milk, eggs and cereal are at all time highs. Schools are raising lunch prices. Power companies are requested rate hikes to counter how they have been impacted. Every company that moves a product or physically distributes services has been affected. All of the extra cash is being directly funneled to the gas and oil companies. They defend their profits.
The worst part is it is all a farce. My friends, this is nothing more than a scheme. It's an illusion and slight of hand that would make Criss Angel blush. Oil companies will say that they have no control of gas prices. They blame it on OPEC and slither back to behind closed doors. "Gas obviously comes from oil. If OPEC raises the prices, we have to raise the price of gas." Now, that's true to an extent. But, oil companies are charging us today's market prices for oil they secured at yesterday's market prices, if they bought it at all! It is pure profit for these companies and they are doing it on the back of almost every American citizen and company in this country.
Monopoly Power not Subject to Supply and Demand
Because it is early spring, our nation is coming off of its regular low driving season. Doesn't matter. Prices have gone up steadily even irrespective of the fact that usage has gone down. The EIA announced that inventories rose by 1.1M barrels. We have plenty of supply with low demand and are still paying record prices at the pump. There was no major hurricane or other natural disaster to negatively impact our economy.
Now, peak driving season is about to get underway as families across the country get prepared to take their summer vacations. This is the time that gasoline usage increases; which affects supplies and raises the prices. This is also the time that U.S. oil refineries have decided to reduce their output to levels we haven't seen since Hurricane Katrina destroyed the gulf coast. We'll have even less gas circulating through our economy. "Good time for maintenance" they say. Therefore, record prices are expected to go up even higher this summer; even outside of normal trends. They always seem to justify the price going up. But, we never see the decrease when usage trends favor the consumer.
Americans don't have much choice but either pay the rate or ride a bicycle to work. The oil companies have a stranglehold on our economy through their monopoly. Conserving doesn't really help much as it slows our economy even more without really addressing the issue. Drilling in ANWR and other parts of our country will not help much. American companies that drill today for oil within the United States still charge OPEC pricing along with our Canadian and Mexican "friends". If we buy crude at OPEC level pricing, American citizens still won't see any difference in their wallets. Additionally, the increased supply probably will not help. We don't get the benefits of supply and demand today. Taxing their excessive profits will not lower our rates as we still pay the same price at the pump. It just takes our money from the oil companies and give it to the government. I'm sure Americans would prefer to simply keep their money.
The solution is simply to reinstall capitalism to the oil industry. The subsidies and tax breaks that we give them today should be redirected to finance new competitors. For American drilled oil, these competitors should be mandated to charge special a American rate for oil distributed within the country. We also need to develop and promote alternative sources of energy and devices that will be compatible with these sources.
