OMG gas prices are high and big oil companies are making huge profits! Panic, scream, run around with your hands in the air yelling that the sky is falling.
Folks … if you haven’t seen this coming in the last 20 years you are BLIND. I’m not going to say a whole lot on this as I don’t have nearly the time it would take to fully write a rant about the misrepresentation of this situation. I will, however, point out a few facts. Please feel free to look up more information on the matter though most of the media is not giving the full picture.
US oil production has dropped something along the lines of 40% in the last 35 years, no new refineries have been built in the US in the last 30 years and we are still down roughly 5% of our refining capacity due to last years hurricane season. The refineries that we do have (many of which are outdated) are operating at or near 100% capacity.
Add to that the fact that in the last 30 years or so the price of a barrel of crude oil has increased over 400%, while gas prices at the pump have increased less than 175% in that same time frame. This means that ‘big oil’ is actually making less profit per gallon than they were 30 years ago … a lot less.
So how are they posting ‘record profits’? … come now … is it THAT hard to figure out? They are selling a LOT more gas and oil. US consumption is up by a huge amount over the last 20-30 years, as is consumption from countries around the world.
Surely that means that they could lower their prices, right?
Not necessarily. Oil companies generally make their money through volume … meaning they operate on a small profit margin. Meaning that if you take their profit margin out of the cost of a gallon of gas at the pump … chances are pretty good that it wouldn’t be a significant change in the cost of a gallon.
High Gas Prices No Mystery (Bug Me Not)
'Green' Politicians Add to Gas Price Woes
Oily politicians: Part II
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