Gas Prices: Who’s to Blame? – Roger Ingalls

Often, filling stations take the heat for high gas prices but, in reality, your local pit stop doesn’t make much money from the fuel they sell. They make pennies per gallon. Most of their revenue comes from junk food sold out of the attached convenient store. Yes, stations do raise prices minutes after crude oil goes up and then lower the price weeks after oil decreases so they do take a little advantage but that has always been the case. Gas stations are not to blame for the current high price of fuel.

Are oil producing companies or middle-east countries to blame for high gas prices? For the most part, they run their output and let the market dictate the prices. They may vary production levels a little but it hasn’t been a market-driver since the 1970s. Oil suppliers are not to blame.

How about oil refineries, are they the evil ones? Back in 2008, oil peaked at $147 a barrel and gas prices rose to about $4.30 a gallon. Now, in early 2012, gas prices are again hitting the $4.30 range but oil is trading at approximately $105 a barrel. Something seems fishy. Oil is 30% less now than in 2008 but current gas prices are the same. Also, we now use 17% less gas than we did in 2008; it doesn’t add up. Demand is down, crude oil prices are lower but fuel prices are higher!

US oil refineries are to blame for the current increase in gas prices. They created an artificial shortage by reducing their refining capacity to 85% of what it was in 2008. The refineries say they had to close down some refineries because the crude oil quality has made some of their production capacity obsolete. It is unbelievable that companies making record billions in profits cannot keep up with the required technology in their own industry. I believe this excuse is a flat-out market manipulating lie. These big companies are not that stupid; they know what kind of oil they’re getting years in advance.

When gas hits $8 per gallon in a year or two, you can blame deregulating legislation that now allows reckless speculation (futures trading of oil) and the elimination of alternative energy programs by Ronald Reagan in the 1980s. However, the current high price of gas falls squarely on shoulders of US oil refineries.

Oil Companies Disgrace, Public Apathy

You know from my novel, The Accidental Activist, that I have no love for the oil companies. You have probably seen infomercials, full page adverts and websites set up by the oil companies to tell us how green they are becoming and what worthwhile members of the community they are, as seen through the various philanthropic project that they donate to.

I’d like to share an email (a public one) I received from Jim Messina. Jim manages the Presidential Campaign for Obama ’12. I had started to paraphrase what he wrote, but I can’t do a better job than Jim:

“The CEOs from the five major oil companies — which together booked $36 billion in profits in the first quarter of 2011 alone — went to the Senate on Thursday to try to justify the $4 billion in tax giveaways they’re receiving this year.

It’s a head-smackingly obvious example of how broken Washington is that there’s even a question about this. These companies don’t need and don’t deserve taxpayer money — especially with a budget deficit to close and gas prices at or near record highs.

Even worse is the fact that when the Senate tries to strip these oil company giveaways, it’s likely that a minority of senators will block a vote from happening. And even if the Senate manages to pass a bill eliminating the giveaways, there’s little chance it will be brought up for a vote in the House.

Here’s why: These five companies are expert manipulators of the money-for-influence game in Washington that the President is working to change. It’s simple math — they spent more than $145 million last year on nearly 800 lobbyists whose job is to defeat bills like this one. The $4 billion they’ll likely get to keep as a result represents a 2,700% return on their investment.

I’d like to be able to say with certainty that you can do something to help pass this bill, but the fact is that at this stage we may not be able to affect the outcome of next week’s vote.”

When we are cutting essential social services, when we are cutting education and health, when there are people unemployed and losing their houses – how do we let the oil companies and their politician puppies get away with it?

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).