Skip to comments.Pains at the Pump (WSJ on "Price Gouging")
Posted on 05/28/2007 8:25:27 AM PDT by The Pack Knight
It's Memorial Day weekend and the start of the summer driving season, so naturally it's time for Congress to grandstand against $3-a-gallon gasoline. And right on cue, the House passed legislation last week to criminalize gasoline "price gouging," whatever that is. Perhaps this is all designed to distract the public from Congress's own role in raising gas prices.
Under the anti-gouging law, service station owners could face up to 10 years in prison if they dare to raise their prices too much when supplies are low. Representative Bart Stupak, the Michigan Democrat who sponsored this scheme, said the vote would determine whether Members "side with Big Oil" or "side with consumers who are being ripped off at the gas pump." Who elects these guys?
The inconvenient fact is that there's no evidence of price rigging by Big Oil or the tens of thousands of independent service station owners across America. The causes of higher gas prices include $65-a-barrel oil caused by rising global demand and geopolitical tensions, a record high U.S. gasoline consumption of 380 million gallons a day, and refined gasoline shortages caused by Congressional rules and mandates. Far from withholding production to raise prices, U.S. gasoline production of 8.8 million barrels a day is higher than any time in history and refineries are getting more gas per barrel of oil than ever before.
(Excerpt) Read more at opinionjournal.com ...
Still, it's an important discussion. If you think we have energy problems now, just wait until this beauty of a bill becomes law.
I'll bump this thread tomorrow, which should be more suitable for discussion.
Remember our fallen today, and God bless their comrades still fighting.
So would Congress be happy if retailers just decided to run out of inventory rather than risk prosecution and prison?
You make a good point. But there’s still something funny going on. How come there paragons of free enterprise, the oil companies, don’t compete with one another?
As somebody said last year on one of Rush’s shows, how come our mailboxes are not full of Shell and Exxon coupons like Domino’s and Pizza Hut?
Something is wrong in this “market”.
Of course, Diocletian was simply ignorant about economics--he wasn't running for re-election on a program of bashing big business.
However, to address your main point. Thanks to Government regulation, lawsuit abuse by “environmental activists” and out of control regulators in various “Environmental Projection Agency's” at both the state and Federal level we have NO Free Market in Energy.
As yourself this. Why don’t a collection of the Always Angry Media types get together with some fat cat like George Soros and build a refinery? After all, look at the “massive profits” to be made if you cut in on “Big Oil”’s action?
Because they cannot. NO one can afford to sink the billions into a new refinery to fight their way thru the maze of various Govt regulatory agencies, the junk lawsuits from every greenie wacko then buy the land, equipment et al and pay all the taxes while waiting 10-15 years for that investment to pay itself off. Much easier to just import gas like we do oil.
The problem is we have TOO much Govt regulating this industry so the result is “Big Oil” has what amounts to a Govt Imposed Monopoly on the production of Gasoline! Govt is the PROBLEM not the SOLUTION here.
What do you mean they don’t competete with each other. They have their prices prominently posted at each retail location. You can even find websites that have prices at locations all over the US. Nobody puts a gun to your head to buy a particular brand at a particular location.
The reasons that gas is high:
1. A cartel that controls crude oil production and manipulates supply to keep prices high. This is much less effective today than it was 30 years ago as the cartel members operate on pure greed and so will routinely buck the group and increase produciton in order to cash in on higher prices.
2. Government failure to develop domestic sources. Democrats and some Republicans bow to the “environmental” lobbies and refuse to do anything to help the USA become less dependent on foreign oil or to augment the supply and keep prices down. I would not be surprised to learn that money from the aforementioned cartel has an influence on this as well.
3. Government regulation preventing the building of new refineries. Last I read we haven’t built a new refinery in about 30 years. The price of gas is up due to an inability to refine oil fast enough to keep up with demand. We have a gas shortage - not an oil shortage.
4. Government regulation that mandates “boutique” formulations of gasoline. These are tailored to different regions of the country. The result is added cost, delay and shortages when demand outstrips the refinery dedicated to the particular blend and no other refinery can step in and fill the demand because their product doesn’t fit the regulated formula for the region.
5. Government regulation making the building of nuclear power plants virtually impossible. Government types yak away about “alternative” energy sources then work overtime to prevent using the one alternative source we know works.
6. Government taxes at both state and federal level.
7. Price gouging. This one does happen but only rarely and apparently only at individual stations. No one gets away with this one for long as the local media jumps all over it and the person who does it is quickly pounded into submission. No major oil company does it as they simply cannot get away with it - unlike our semi-criminal and wholly irresponsible government “leaders” who are the primary cause of high energy prices, foreign dependency (with all that implies these days) and a total lack of any coherent or effective energy policy and who, with media support, get away with their stupidity and so are reelected over and over and over again thus perpetuating their stupidity to the detriment of the country they profess so much to “love”.
We live in a great and free country..defended by free men with free will.
As a result..all of us can own a refinery..just buy some stock. I recommend Conoco Philips (COP) or Valero (VLO).
Buy some share of each and enjoy the tremendous profits.
In the past 2 weeks, there have been builds in motor gasoline stocks. Production will increase, slowly, bar any Gulf hurricanes, as now-offline capacity is restored. Presumably also, BP will get their thumbs out of their arse in Texas City, which will add another 4 MM gallons/week at least.
Refinery utilisation just crossed 91% last week. Postulating that the refiners get the Ute figure up to the (recently) typical 94-95%, gasoline stocks should normalise sometime around November, ceteris paribus.
I’d add to that the fact that two of our five largest refineries that can handle sour crude, the cheaper stuff, are partially down and having to use sweet crude, which is expensive.
On top of all the other reasons given above, Memorial Day weekend always arrives at gas crunch time. It’s near the beginning of the summer driving season. And it’s near the time when refineries change over from fuel oil to gas and from winter gas to mandated summer gas.
The topic of high priced gasoline arises nearly every Memorial Day weekend.
This legislation, aims to punish “evil” Big Oil (TM) by smacking down the independent service station owner.
This is like punishing the syringe maker when the vaccine causes a bad reaction...
“Congress: The last refuge of a scoundrel”
Oh, of course. I was really only mildly disappointed, and thought it’d be a better editorial for tomorrow, Tuesday. It’s mainly because the Journal usually has holiday-specific editorials, such as the annual “In Hoc Anno Domini” one they reprint every Christmas.
Also, it’s just rubbed me the wrong way for a while now that Memorial Day is just the “Official Start of Summer” instead of what it was originally intended to be. Of course, you could say something similar about any holiday these days.
Funny how Wall Street Journal cannot connect the dots between the high price of a barrel of crude with the commodity traders under their noses on Wall Street......
Someone is getting rich, and it is the TRADERS in OIL COMMODITIES... NOT the oil companies.
The oil company profits are the same PERCENTAGE they have always been. The higher the price, using the same percentage, still gets higher $$$’s of profits. But, not a higher percentage.
EVERY business has a basic perdentage of profits they strive for. You have to have profit and capital for future expansion and other operating costs.
As my brother says- When you get to sign the FRONT of a paycheck, you get a different perspective on the whole thing. Any fool can sign the back side of a paycheck...even an illegal intruder who doesn’t speak English.
Excellent editorial. Thank you for posting it.
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