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Bush Orders Probe Into Gas Prices

Updated

From the Washington Post:

WASHINGTON (Reuters) - President George W. Bush, alarmed by a spike in gas prices at the pump, has asked the Departments of Energy and Justice to look into possible cheating or manipulation of gasoline markets, White House spokesman Scott McClellan said on Monday.


Bush plans to announce his directive publicly in an energy speech on Tuesday in which he will talk about "how gas demand is only projected to increase this summer and experts are projecting that gas prices will remain high," McClellan told reporters aboard Air Force One as the president flew back from Nevada.

The pain at the pump keeps getting worse for U.S. consumers as the national price for gasoline skyrocketed 13.1 cents over the last week to $2.91 a gallon, the fourth highest average retail price on record, the government said on Monday.

Republican congressional leaders, worried that high fuel costs will turn voters against them in this November's midterm elections, urged the Bush administration to investigate whether oil companies are gouging consumers at the pump.

"Anyone who is trying to take advantage of this situation while American families are forced into making tough choices over whether to fill up their cars or severely cut back their budgets should be investigated and prosecuted," Senate Majority Leader Bill Frist and House Speaker Dennis Hastert wrote on Monday in a joint letter to President George W. Bush.

More here:

ABOARD AIR FORCE ONE (AP) -- President Bush is trying to calm Americans' outrage over soaring gas prices by ordering an investigation into whether the price of gasoline has been illegally manipulated, his spokesman said Monday.

During the last few days, Bush asked his Energy and Justice departments to open inquiries into possible cheating in the gasoline markets, said White House press secretary Scott McClellan. Bush planned to announce the action Tuesday during a speech in Washington.

Bush is under pressure to do something about gas prices that have reached nearly $3 a gallon. In a new CNN poll, 69 percent of respondents said gasoline price increases had caused them personal hardship. Other polls suggest that voters favor Democrats over Republicans on the issue, and President Bush gets low marks for handling gas prices.

I don't like high gas prices either, but placing all the blame on the oil companies is a gross oversimplication. There's Iran's president who causes the price of oil to jump everytime he opens his mouth. There's the fact that oil refineries are at full capacity without any plans to build new ones because of ridiculous EPA regulations.

And there's Congress. The energy bill Congress passed is a big contributor to the sharp increase gas prices. For an explanation, take a look at the transcript from the most recent Journal Editorial Report on Fox News:

Gigot: A barrel of crude hit record highs this week, and then jitters over the continuing nuclear standoff with oil-rich Iran. With prices at the pump pushing $3 a gallon in many markets, what can the U.S. do to bring costs under control? We're back with Dan Henninger and Rob Pollock. And also joining the panel is Wall Street Journal editorial board member Kim Strassel.


Kim, the politicians want to blame foreigners, or they want to blame oil companies, but the Congress itself holds some responsibility for this recent run-up in gasoline prices. Why don't you tell us about the ethanol?

Strassel: A lot of the blame is theirs. You know, to understand this story, you have to go back to 1990, when the Congress said the people had to oxygenates in their gas. And the two main ones were MTBE and ethanol, and they became a big part of our fuel supply. Now, two things have happened over the past year. Last year, in the energy bill, Congress did not give liability protection to MTBE makers that are being hit with lawsuits, and they are now pulling out of the market right and left. And ethanol makers, they handed them a huge prize in the form of a new mandate, saying everyone had to use more of their stuff. Not only is the industry not capable of filling that mandate; they're certainly not capable of making up the slack from those MTBE makers that are getting out. So we're having gasoline shortages now.

Gigot: So 10 cents, 20 cents a gallon, might be Congress's own fault from its energy bill that was suppose to solve this problem last year?

Strassel: Absolutely. And it could be worse. I mean, there's been some shortages in Texas, which is to be expected. Places like--

Pollock: And on the East Coast, you know, just yesterday and today shortages are being reported because of the ethanol mandates.

Strassel: And that's because it's hard to transport ethanol.

Henninger: Well, one answer to the shortages is to allow the importation of ethanol from Brazil. But there's a 54-cents-a-gallon tariff on Brazilian ethanol--

Gigot: It's amazing.

Henninger: --which they will not lift because they are trying to protect our own internal ethanol industry.

Gigot: Well, with elections coming up and gas prices being an issue, the Democrats think they can exploit it. Why is the Bush administration not lifting those tariffs or import quotas?

Strassel: Presidential politics. You know, look, I mean, you know the ethanol industry is centered in Iowa.

Gigot: I'm sorry, but 2008 is two years after 2006.

Strassel: You can never be too close to the ethanol industry.

So the American people can blame their very own Congress for the sudden spike in gas prices.

Update: Betsy Newmark enjoyed Neil Cavuto's response to Sen. Chuck Schumer who did quite a bit of complaining about gas prices:

I see Chuck Schumer wants to investigate the oil companies for price gouging. Why doesn't he ask his fellow politicians to do the same about tax gouging?


After all, oil companies' profit works out to nine cents a gallon. Taxes total more like 40 cents a gallon.

But you don't hear Schumer whining about the taxes. After all, that's an easy source of revenue for a monotonous list of social programs whose failures are legendary. Better to keep funding them through taxes that are killing us, than demanding accountability due all of us.

Senator, if you want to bring gas prices down, start offering solutions and stop playing games.

Start opening areas for more oil exploration here, so we don't rely on oil from over there.

How about it, Chuck? Let's eliminate some of those gas taxes you so conveniently ignore.

Update II: In his speech today, President Bush has ordered a temporary suspension of environmental regulations on gasoline production to help with the cost of gasoline.

President Bush on Tuesday ordered a temporary suspension of environmental rules for gasoline, making it easier for refiners to meet demand and possibly dampen prices at the pump. He also halted for the summer the purchase of crude oil for the government's emergency reserve.


The moves came as political pressure intensified on Bush to do something about gasoline prices that are expected to stay high throughout the summer.

Bush said the nation's strategic petroleum reserve had enough fuel to guard against any major supply disruption over the next few months.

"So, by deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps," he said.

Wholesale gasoline futures prices for June delivery dropped 8 cents a gallon to $2.10 on the New York Mercantile Exchange immediately upon Bush's remarks.

Easing the environment rules will allow refiners greater flexibility in providing oil supplies since they will not have to use certain additives such as ethanol to meet clean air standards. The suspension of oil purchases for the federal emergency oil reserve is likely to have only modest impact since relative little extra oil will be involved.

Environmental regulations should be reduced permanently.


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Comments (66)

I don't buy this at all. C... (Below threshold)
JimK:

I don't buy this at all. Crude to the refinery and Gas at the pumps is paid for weeks and months in advance. Sometimes years. Prices, on the other hand, rise and fall based on what happened YESTERDAY. It's all perception. When I worked for a Mobil...and granted this is just one station, but he raised prices literally on a whim. If there was talk of higher prices in the news, he raised them. If any other station went up a single penny, he went up 2. He had a killer location.

Never once in all the time I worked there did I see him set a price in accordance with actual cost.

Someone is scamming us all. It's one thing to make a profit. It's another thing to gouge people on what is a necessity for so many. The taxes people want to complain about aren't changing every 6 months. Prices are. Blaming it on Congress doesn't tell nearly enough of the story.

The problem of the gas spik... (Below threshold)
James Cloninger:

The problem of the gas spikes comes down primarily to two factors:

1) Oil is a commodity, and it is the traders to help to determine the prices. With Iran doing its nuclear sabre-rattling, that is causing nervousness in the market, with fears of reduced availability of oil...less product, higher prices.

2) All the oil in the world won't help if we cannot refine it. The last new refinery in this country was built in the 1970s. A number of refineries in the Gulf are still shut down thanks to Katrina, or only working at a partial capacity. Until enviro-NIMBYism is tackled, don't expect the constuction of new refineries to alleviate the shortage of REFINED petroleum products.

3) The restriction of drilling for new oil sources locally. We are not allowed to drill in the Gulf, yet Mexico is, and reaping the benefits. No drilling in Alaska...hell, no drilling in Utah or Colorado. Until enviro-NIMBYism is...yada, yada.

These three factors are the main source of the higher gas prices.

The average oil companies profits run about 9%...compare that with other companies who run 11-15%. And oil companies have no say-so over the price of the commodities market.

Those are the facts, and until the three points are addressed, get used to $2.50+/gallon prices.

If the government REALLY wanted to help they would:

1) Allow one formula standard for gas across the company instead of each state requiring it's own formulation...which is cheaper/easier...one formula for all, or a refinery having to do 50 formulations? Ever noticed that since fast-food restaurants have added a whole bunch of new crap to their menus, the speed of service has dropped significantly?

2) Decrease the amount of federal tax per gallon. Yeah, I can see Congress rushing to do that one.

I'm going to pre-empt mak, John Goodman right here and say that Bush does not control the oil companies, all his stocks are in blind trusts so he can not manipulate the market to his advantage (that goes for Cheney as well). Haliburton is not in the oil commodities market.

If you want to actually argue the merits of my above points, I will discuss them with you in a rational and logical manner. If you want to be wankers instead, I will promptly make fun of you.

JimK -- there is one factor... (Below threshold)

JimK -- there is one factor I don't think you are considering.

That gasoline the dealer purchased "yesterday" (as in: paid for months ago) has to be replaced at TODAY'S wholesale prices by the dealer, if he is to fill your tank tomorrow (or months from now)

Here is a couple of articles that illustrate who is REALLY "profiting" from oil:

http://www.taxfoundation.org/publications/show/1139.html

http://www.taxfoundation.org/news/show/1168.html

Maybe what we need is the inverse of a windfall-profits tax ... a windfall-tax-revenue-rebate, back to all of us.

Consider that pulling oil from the ground is an expensive, risky, and long-time-horizon business. We love to beat up on Big Oil, but perhaps the rewards they reap are a fair exchange for the long-term capital investment ... and dry holes ... they have to endure.

And for that matter, when times are bad in the oil patch, does government step in and help, in proportions commensurate with the taxes it collects during the boom times?

I don't buy this at all.... (Below threshold)
James Cloninger:

I don't buy this at all. Crude to the refinery and Gas at the pumps is paid for weeks and months in advance. Sometimes years. Prices, on the other hand, rise and fall based on what happened YESTERDAY. It's all perception.

The reason, in part, is that retailers place their orders for gas weeks or months in advance. They have to anticipate what the cost of the refined fuel will be months from now. If crude spikes, it can be surmised that refining costs will also go up, hence they must recoup the money NOW when they place future orders. That is not to say that there might be some unsrupulous price increases among some retailers, but this is important: it's the local retailers that set the pump price...it is not set at the oil company headquarters.

Thank you Rich, you provide... (Below threshold)
James Cloninger:

Thank you Rich, you provided links to my argument.

We love to beat up on Bi... (Below threshold)
James Cloninger:

We love to beat up on Big Oil, but perhaps the rewards they reap are a fair exchange for the long-term capital investment ... and dry holes ... they have to endure.

Not to mention goverment interference, mandates, regulations, formulae, taxes, enviromental restrictions....etc.

You're welcome, James.... (Below threshold)

You're welcome, James.

Now all we need to do, Rich... (Below threshold)
James Cloninger:

Now all we need to do, Rich, is sit back and wait for mak to storm in and proclaim:

1) Bush controls the world oil conspiracy.
2) Big Oil is funding Al-Qaeda
3) We went to war for Iraqi crude! (which, by the way, we are still waiting for that windfall)
4) Bush is a facist
5) Bush is a neo-con zionist
6) Bush tortures harmless brown people, and kittens.

James ...You forgo... (Below threshold)

James ...

You forgot one ...

7) You Pavlovian puppies ...

Is this what lemmings sound like, just before they go off the cliff?

Given my history I'll probably end up going head-to-(empty, shrunken)-head with him sooner or later:

Well, to take credit, it wa... (Below threshold)
James Cloninger:

Well, to take credit, it was my correction that allowed him to use "Pavlovian Puppies"...before he was using "Pavlovian Pussies", which, while alliterate, was totally inaccurate vis-a-vis the good scientist.

Is this what lemmings so... (Below threshold)
James Cloninger:

Is this what lemmings sound like, just before they go off the cliff?

No, lemmings have the sense to be pushed off the cliff by a Disney documentary director in relative Elysian silence.

Pity we cannot say the same for our Mak-daddy.

Of course, there is no way ... (Below threshold)

Of course, there is no way in hell that Congress will think about removing the taxes that they have placed on every gallon of gas. Why should they? the Democrats are probably rejoicing at the high rpices, a lot of them want to see gas at $10 a gallon just to punich people with big cars. The only downside is that the oil companies are getting the $$ and not them.

It's supply and demand. Mo... (Below threshold)
Thorstein Veblen:

It's supply and demand. More supply, same demand = low price. High demand, low supply = high price. Oil is a fungible commodity, bought and traded in the world market with a variety of derivative instruments to hedge against price shocks and risk.

You two beanbags don't have a clue what you're talking about. But it's interesting to see your determined opinion on global economics. Try taking a basic course in economics before spouting off.

Here's a clue: since oil is a fungible commodity, adding supply in the US --by drilling more -- won't help unless supply is significantly affected. This scenario is unlikely AND meaningless unless demand is also simultaneously curtailed. Or if demand significantly decreases.

In the mean time, I hope gas goes up to 10 bucks a gallon (with an additional 10 buck Hummer tax) and you right wing douche bags have to pay 200 bucks from a trip to your retarded NASCAR incest-fests.

To pay for all your oil addicted greasy asses, no choice but to get in bed with King Abdul-la-la. Once, more idiotic right-wing policies to the rescue.

Would,nt it be a thing of b... (Below threshold)
virgo:

Would,nt it be a thing of beauty to have Bush hold a press conference which He is tomorrow by the way, and declare a national emergency and order anwar and all other oil locations to start producing now, as well as ordering the building of new refineries? what do you think the lefts response would be? there would be abject fear ..

Let's play another hypothet... (Below threshold)
Single Digit IQ:

Let's play another hypothetical game here, genius.

Wouldn't it be great if you woke up tomorrow and realized that your douchebag president has an approval rating of 33%, is hated by the rest of the world and mangles the English language even more than you?

Hmmm...oh wait. That actually happened.

Hey single digit i.q. ,what... (Below threshold)
CurlyLarryMoe:

Hey single digit i.q. ,what an apt name you chose, fits you perfectly.

The rest of the world hates us ? brilliant you unimaginable buffoon !whos your president hmmm Jaque Chirac i bet. i wondered when the transients were going to show up on this thread.

ZERO I.Q. Franken ... (Below threshold)
frankfucszeroiq:

ZERO I.Q.

Franken has a warm wet one waiting just for you!

dont forget to say thank you now.

You two beanbags don't h... (Below threshold)
James Cloninger:

You two beanbags don't have a clue what you're talking about. But it's interesting to see your determined opinion on global economics. Try taking a basic course in economics before spouting off.

I have taken a number of courses in Economics, so I do have a clue about what I'm talking about. Neener-neener.


Here's a clue: since oil is a fungible commodity, adding supply in the US --by drilling more -- won't help unless supply is significantly affected. This scenario is unlikely AND meaningless unless demand is also simultaneously curtailed. Or if demand significantly decreases.

Adding supply will help if more crude can be directly sent to the refineries, instead of shipping it in. You are correct that this is unlikely, for the following reasons I pointed out in my initial post. A glut of local crude would curtail fears about supply shortages from the M.E., therefore traders will not have the incentive to drive the price up--hence the final cost of refined petro comes down. Demand does not have to significantly decrease, as long as SUPPLY significantly increases...more supply, lower prices. Simple economics. Did that not get covered in YOUR econ class?

In the mean time, I hope gas goes up to 10 bucks a gallon (with an additional 10 buck Hummer tax) and you right wing douche bags have to pay 200 bucks from a trip to your retarded NASCAR incest-fests.

I was willing to overlook "beanbag" but your final paragraph has reduced you to another DU/Kos flame-thrower who cannot convey a different point of view without an insult or a wrong assumption. I do not drive an SUV (which I see is pointless in the smooth roads of the city), nor do I watch NASCAR. (What, watching a bunch of cars circling round and round? About as entertaining as watching a guy hit a golfball and walking after it.)

Speaking of SUVs...I seemed to notice many SUVs in my city which have old fading "Gore" or "Kerry" stickers. A few, who obviously do not comprehend the word "irony" also have--I kid you not--:

"NO BLOOD FOR OIL!"


SINGLE DIGIT: Apropos.
33% huh? Well, I guess that means I won't be voting for Bush again next election.
When the rest of the world gets to vote in our elections, then I will give a rat's arse what the rest of the world thinks of us.

Is it me or are are liberal... (Below threshold)
Proud Kaffir:

Is it me or are are liberals just incapable of stating a single argumentative sentence without resulting to name-calling and rabid BDS?

Here we are having a discussion about what is leading to higher oil prices and how to curtail it, probably a discussion going around every kitchentable and water cooler, and the liberals respond with douchebag president and you right wing douche bags. (A pattern? Perhaps a certain LA Times columnist or two of his alter egos are paying us a visit.)

Are the liberals angry or just plain mad, in the psychological sense?

Bush Orders Probe Into Gas ... (Below threshold)
cavjam:

Bush Orders Probe Into Gas Prices


Foxes To Investigate Henhouse Pillage

Well, if higher gas prices ... (Below threshold)
mantis:

Well, if higher gas prices accelerate development in alternative fuels, I'm all for them. I'd rather have higher prices now than shortages later. And screw building new refineries. We need to pour resources into nuclear, wind, solar, ethanol and biodiesel.

Now excuse me while I go back to removing the engine from my VW. It's finally time to convert to electric.

and you right wing... (Below threshold)
Marc:
and you right wing douche bags have to pay 200 bucks from a trip to your retarded NASCAR incest-fests.
Thorstein. what happened? Missed your bus to the Martinsville NASCAR race and getting face time on Datelines cameras as they looked for racial biggots and hate mongers? (not to mention economic illiterates)

Sour grapes has such a, well.... sour taste.

And I should have mentioned... (Below threshold)
Marc:

And I should have mentioned. "NASCAR incest-fests," as opposed to what?

Leftist psuedo-envior-winnies burning gallons and gallons of fuel attending the lastest NFL showcase of wife-beaters, rapists, steroid inflated blimps and sexual abusers?

Is it me or are are libe... (Below threshold)
James Cloninger:

Is it me or are are liberals just incapable of stating a single argumentative sentence without resulting to name-calling and rabid BDS?

No, it's not just you.

And screw building new r... (Below threshold)
James Cloninger:

And screw building new refineries. We need to pour resources into nuclear, wind, solar, ethanol and biodiesel

Well, the enviro-lobbyists have all but killed new nuclear energy development in this country. When was the last time we built a new reactor?

Wind works somewhat when, get this, there is WIND blowing. What happens when you have a calm day? By the way, Kennedy stopped development of a wind turbine farm because it would clutter up his wonderful view of the Atlantic.

Solar--we've been working on this for 30 years, and the main problem is much of the potential energy from the sun is absorbed by the atmosphere...and like wind, what do you do when it's overcast or it's nighttime?

Ethanol/Biodiesel is promising, but still in the early stages. Still there is some hope.

We've been chasing the "alternative energy" tail for the past 30 years or so, and we have made minimal progress. Now, if you wish to be phillanthropic and throw some of your money into research, please feel free.

I'll take the refineries for now. That, at least, is a proven technology.

Well, the enviro-lobbyis... (Below threshold)
mantis:

Well, the enviro-lobbyists have all but killed new nuclear energy development in this country. When was the last time we built a new reactor?

1996, Watts Bar reactor in Tennessee. However, capacity has increased due to upgrades in recent years. And as far as development, the generation IV reactors look very promising, though implementation is years away.

Wind works somewhat when, get this, there is WIND blowing. What happens when you have a calm day? By the way, Kennedy stopped development of a wind turbine farm because it would clutter up his wonderful view of the Atlantic.

Wind and solar are of course not at the level where they can be the sole source of energy for any area, but by complementing existing sources you can conserve dramatically. A complementary nuclear/solar/wind grid would provide uninterrupted power with minimal pollution. Plus as storage continues to be developed, solar and wind become more and more viable.

Ethanol/Biodiesel is promising, but still in the early stages. Still there is some hope.

Look at Brazil where ethanol burning flex cars outsell gasoline-only cars now.

We've been chasing the "alternative energy" tail for the past 30 years or so, and we have made minimal progress. Now, if you wish to be phillanthropic and throw some of your money into research, please feel free.

I have put some money into it (and I was serious about converting my car to electric. I just picked up the batteries this week), but if you think minimal progress has been made you haven't been paying attention.

I'll take the refineries for now. That, at least, is a proven technology.

With no future.

Mantis -- my day job involv... (Below threshold)

Mantis -- my day job involves designing electronic power-conversion and battery-management equipment, so I have to ask ... what chemistry and make of batteries are you planning to install in that Bug? And what kind of speed/range performance do you anticipate?

I do agree there has been progress ... but mass-market, cost-effective alternatives to fossil-fuel power are still elusive.

Even hybrids are "not quite there yet" for the average American -- many are finding out that the fuel-savings is less than anticipated.

That's not for lack of trying ... a lot of my salary during the 1990's was earned designing battery test equipment that went into EV R&D, and even equipment for production use. Other technologies were pursued at simiar levels.

The limitatons -- contrary to the conspiracy theorists -- have been located at the nexus of the laws of physics and basic economics.

As for wind and solar ... the need for base-load power as backup limits their usefulness ... and they have their own environmental impacts (both require the development of a LOT of space per MW when implemented on a large scale ... and in the case of solar, that's a lot of SHADED ground unless you place it on buildings). As storage technologies develop, their usefulness will increase ... but we aren't there yet.

As for nuclear ... the problem is primarily political. Keep in mind that the most strident oppositon is permeated with "watermelons", who care not one whit about economic performance, for they consider its pursuit part of the problem.

BTW, when did they START building Watts Bar?

Decrease the amount of f... (Below threshold)
docjim505:

Decrease the amount of federal tax per gallon. Yeah, I can see Congress rushing to do that one.

Hell, our lovable government here in No.Carolina recently RAISED the gas tax. When asked if he'd consider a temporary reduction / moratorium, Gov. "Tax Hike Mike" Easley basically told us all to f*** off, the government NEEDS the money.

Is it me or are are liberals just incapable of stating a single argumentative sentence without resulting to name-calling and rabid BDS?

No, it definitely ain't just you. Most of 'em are stark staring mad.

...the generation IV reactors look very promising, though implementation is years away.

I'm pleasantly surprised that we have a lefty who can talk rationally about using nuke power instead of screaming about Three Mile Island and mutations. Unfortunately, I think the odds of getting a nuke plant built in this country given the current political climate are not very good.

Now excuse me while I go back to removing the engine from my VW. It's finally time to convert to electric.

Interesting. You're doing the work yourself? How much does it cost to do the conversion, and what is the expected operating cost?

I've noticed also that some... (Below threshold)

I've noticed also that some folk are monomaniacal when it comes to BSD and namecalling. But whatever - they've got to live in their own heads but I don't have to join them.

Re Watts-Bar - they started building it in 1973. So - 23 years from start to output. That's pretty impressive. So using that as a model we could see the first of the Gen IV reactors come on line as early as 2029!

I'm sure the Democrats will propose this any day now, and do what they can to expedite the process. That way, they could be seen as actually DOING something about the problem. (And I could only HOPE that Bush proposes it, though that proposal would be the kiss of death for the idea as far as the Left is concerned...)

J.

Bush Orders Probe Into Gas ... (Below threshold)
maggysturn:

Bush Orders Probe Into Gas Prices

Foxes To Investigate Henhouse Pillage
Posted by: cavjam at April 25, 2006 02:14 AM

Cavjam:

You hit the nail on the head. And today we see Bush's approval ratings drop yet another percentage point (to a dismal 32%). The only amazing thing about this is that there are still people (with obvious limitations on intellectual capacity) who can admit to themselves that in this crisis, as in all other crises we've come up against in the last 5 years, the Bush administration is a complete and total failure. And most of them seem to be big fans of Wizbang too. Go figure.

As someone stated earlier, if the right-wing want to blame someone for the terrible state this country is in, they need look no further than their own mirrors.

So KimIf the poor ... (Below threshold)
mak44:

So Kim

If the poor disadvantaged oil companies are barely ekeing out 9cents/gallon profit, how do you explain the obscene explosion in Corporate Oil Company profits?

Surely you're not going to argue that Oil's obscene profits explosion is a result of selling vastly larger quantities of gasoline at outrageously higher prices!

As you quoted Gigot in your post, the new government regs may have added 10 to 20 cents/gallon. Where is the other $1.25 to $1.50 coming from? You ain't seen nothing yet.

Just wait til the 1st Tropical Depression gets named and $4 gas will be here before the nascient depression gets off the coast of Africa.

We need to use the oil we ... (Below threshold)
Joe:

We need to use the oil we have in this country now! theres enough for 100s of years if we just do it we can develope other alternatives as we go along. to hell with the enviro liberals! they are a curse on this country and they do not have the majority or highground to determine how we live our lives. enough already! build some f-ing refineries nimrods.

"Republican congressiona... (Below threshold)
Lee:

"Republican congressional leaders, worried that high fuel costs will turn voters against them in this November's midterm elections, urged the Bush administration to investigate whether oil companies are gouging consumers at the pump."

He had to be urged? He must be a moron....

A little bit of research fo... (Below threshold)

A little bit of research found this... the info's a touch out of date, but the numbers hold true.

Oil Industry Statistics from Gibson Consulting - Costs to produce and sell a gallon of gasoline in the US

One barrel of crude oil makes about 19½ gallons of gasoline, 9 gallons of fuel oil, 4 gallons of jet fuel, and 11 gallons of other products, including lubricants, kerosene, asphalt, and petrochemical feedstocks to make plastics. More, plus a graphic. The ultimate cost of a gallon of gas at the service station depends mostly on the price of crude oil, and most of the profit after expenses goes to the owner-producers of the oil, whether they are governments or oil producing companies.

Q: How much does the average gas station pay to buy a gallon of gasoline from an oil company?
A: Retailer (gas station) profit is about 1 to 5 cents a gallon. So they pay the posted price, less that and less taxes (federal, state, local).

Q: I did some simple calculations, and the numbers don't seem to make any sense. Let's assume that the price of crude oil is $37.00 per barrel. At 19.5 gallons of gasoline per barrel, this means that a gallon of gasoline in its crude oil form costs $1.90. Yet, when I pump it into my car, I'm currently paying $1.76 per gallon. This means that the gasoline is losing 14 cents per gallon in value when going from ground to gas pump. This must mean that everyone involved in transporting and refining the oil and gasoline must be marking down the final price of their finished product. Companies mark up, not down. Obviously, there is something wrong here somewhere.
A: The 42-gallon barrel of crude oil makes about 19½ gallons of gasoline, 9 gallons of fuel oil, 4 gallons of jet fuel, and 11 gallons of other products, including lubricants, kerosene, asphalt, and petrochemical feedstocks to make plastics. [See also this EIA page] That adds up to more than 42 gallons because of something called "refinery gain" - the processing and chemical changes increase the density and hence the volume of the refined components. So, crudely (pun intended), a $37 barrel of crude represents about 88 cents a gallon to start with. That 88c represents the cost of production plus producer profit. Go up from there.

Numbers that I found some time ago had this for other increments of the cost per gallon:
refiner cost - 13c
marketing cost - 5c
transportation cost - 15c
retailer cost - 5c
refiner, marketer, transporter, retailer profit - 10c (total, not each)
Add that to 88c, add the average 43 cents tax, and -- rather remarkably - that adds up to $1.79, if I added correctly - just about what you are paying. All the numbers vary depending on a long list of things -- refiner costs go up when they have to make specialized local blends (one reason for CA and Chicago having higher prices), marketing costs are higher in competitive markets (i.e., big cities), transportation costs are higher in the boondocks, or generally in places distant from refineries, retailer costs depend on number of employees, whether or not it is a franchise (some rural stations that I know of here in Montana have to pay many thousands of dollars per year for the "right" to be branded Conoco, or whatever); and the total price also depends on differing state and local taxes. So these numbers would be ball-park, approximations.

2006 Question: Why is the price of gasoline not even higher than it is, given that the price of crude is around $63 per barrel, close to double the price of a couple years ago?
Answer: I truly don't know - evidently the forces driving the price of gasoline are beyond me. I'm amazed that the price of gasoline is not much higher than it is.

See also EIA Primer on Gasoline Prices. Other links: this article and this GAO report and This One and another. And Gas Q&A.
It's all well and good to argue about who gets what - but the information can be found EASILY with a bit of looking.

BTW, 9% profit isn't obscene. 33% is - as that's what Citigroup had in 4q 2005. What's in YOUR wallet?

J.

Vote Democrate and this won... (Below threshold)
mark blahut:

Vote Democrate and this won't happen !
Its that easy !

Hey JoeYou been ou... (Below threshold)
mak44:

Hey Joe

You been out w/ your diving rod developing USA proven oil reserves?

The best estimates by geologists are that Anwar would likely yield a toal USA supply for 100 to 200 days. That's one reserve whose non-development typically is blamed on the Greenies.

Your wealth of knowlege re: the location of US reserves for 100+ years out would be worth billions if you got up off your ass and left this blog long enough to report the locations to the Oil industry. Big Oil could significantly reduce their costs & thus ours by firing all those hideously overpaid geologists w/ their budgert-busting research equipment & hiring the sole American citizen who knows the location of 100+ year oil reserves.

No doubt, Bush would give you the National Citizen's Award as well & you'd be one of the lucky few to dine regularly w/ Gates & Trump.

I would,nt dine with those... (Below threshold)
Joe:

I would,nt dine with those egotists if i were paid!

What is a diving rod? ohh you mean divining dont you, well i dont need one! as i look at the entire earth it appears to me that oil is impregnated thruout the planet for a reason ! to be used by man. it is serving its allotted purpose and could never entirely be exhausted for thousands of years! it is a moot point however sice the God that created it all could simply replenish it in an instant. so dont worry yourself about such trivial things, you were made to enjoy life , not suffer thru it blindly.

So Gizmo-it was a ... (Below threshold)
mak44:

So Gizmo-

it was a typo-use your vast reserves of divination to see that it was a missing "n."

Sorry Joethe previ... (Below threshold)
mak44:

Sorry Joe

the previous was to you-apologies for the snub & snide response

Diving was the word

BTW Joeread the re... (Below threshold)
mak44:

BTW Joe

read the rest of your post. How erudite.

No need to worry; what Predatory Capitalism can't resolve, the good lord will. Perhaps He's the One who Big Oil is paying off!

Why dont you ask Him and fi... (Below threshold)
Joe:

Why dont you ask Him and find out?

Hey JoeYou perhaps... (Below threshold)
mak44:

Hey Joe

You perhaps still sit on ole Santa's lap, hide in the forests to catch a glimpse of Sasquatch and stalk other renowned mythological charcaters...I don't

Rich and doc,Yeah,... (Below threshold)
mantis:

Rich and doc,

Yeah, I'm doing the work myself, hopefully it won't take too long. I'm using 8 12-volt lead acid batteries (wish I could get lithium-ion for a longer lifespan, but they're too expensive), a re-timed forklift motor (plus a charging module and motor controller, and a few other items). I'm saying goodbye to my engine, fuel & exhaust systems, radiator, carb, and most importantly gas stations.

It looks like the project is going to cost me $6000 for parts plus my time to do the conversion. If I've done my calculations right, I should top out at 65 mph with a range of 40-45 miles. Of course I should mention that this is meant only to be the local car, my girlfriend's car will remain a gas guzzler for longer trips. But nowadays I almost never travel beyond that range so I should be able to do almost all of my driving in my silent non-polluter, and not pay for gas (added bonus, I'm in Illinois, a big nuclear state, so my electric will be coming from that instead of coal). I'm not sure yet what the cost of the electricity for charging will come to in terms of mileage, but I can guarantee it will be cheaper than gas.

Found this gem in an AP art... (Below threshold)
wave_man:

Found this gem in an AP article by Nedra Pickler a few minutes ago: "The high cost at the pump has turned into a major political issue, with Democrats and Republicans blaming each other for a problem that is largely out of Congress' control. Republicans are worried that voters paying more than $3 per gallon would punish the party in power. Democrats want to make that happen."

Oops. Didn't she get the memo that they were not supposed to say that last sentence out loud?

BTW, all this whining about 'gouging' is driving me nuts. Obviously you don't remember sitting in line in 1973 on an even or odd day to maybe get to buy gas before they ran out. And pay 5 times more than you were paying just a couple of months before. And this, after the government stepped in and froze prices. Once the free market was taken out of the equasion, supply dried up. At least we can get it now.

I spent about a month in Mexico last year. Their gasoline supplier is the Mexican government [PEMEX], no choice of different brands. The price is the same from the US border to Guatemala. The folks down there told me that the gas goes up every month, has for the last 3 years, and NEVER goes back down. Word is that the government uses the gas prices to make up for other shortfalls in receipts. At least we have a free market here. That is, until we ignorantly demand that the President DO SOMETHING!!!!!!!!!!!!!!! OK, do something. Then we can will have something to complain about. There's no gas anywhere, at any price.

Geeez, once again a serious... (Below threshold)

Geeez, once again a serious issue is being politicized.(Whatever happened to the civil discourse frat boy promised when he took office?) We can't blame dems for not drilling in Alaska, or repubs for not reducing the gasoline tax. (Although it's time for congress to seriously consider it) And I know frat boy is an oil man, but what can he do at this point? The auto industry and energy lobby was strong under Clinton and they are strong under frat boy as well. They still rule, and everyone posting here knows it.

Until they decide that another source of energy is more profitable, nothing will change.

One thing Americans should start doing, is walking and riding our fat lazy butts from point A to point B, instead of jumping in our cars and driving three blocks.

f-n, that was beautiful. I ... (Below threshold)

f-n, that was beautiful. I don't agree with much of it, but I actually enjoyed reading it because of the tone. More, please.

Im not fat or lazy and i m... (Below threshold)
Joe:

Im not fat or lazy and i must say ive always loved riding bike and walking , ut that would,nt be practical for a lot of people.

Mak , Are you saying that God is Mythical? than being a clintonian isnt your only problem.

joea pity that you... (Below threshold)
mak44:

joe

a pity that your mythology never explained the difference to you between "than" and "then."

And the best thing about Clinton is that he wasn't a Repub & until January 21, 2001 we still had a democracy.

A few weeks ago when oil wa... (Below threshold)
mak44:

A few weeks ago when oil was $60+/-/bbl, an oil industry analyst on CNBC estimated that the then current price of oil incorporated an estimated $10/bbl hedge fund speculation and a $10/bbl premium occuring from geopolitical machinations.

At 19.4 qal/bbl of gasoline, that's roughly a $1.03 premium attributable to so-called free market pricing and inept international saber-ratttling leadership.

Mak44 You cant sel... (Below threshold)
MoeCurryLarry:

Mak44

You cant sell the democracy thing to the 93 people who were burned alive in the Branch Davidian Complex by your boy slick Willy now can you?

Mak Your right , I... (Below threshold)
virgo:

Mak

Your right , Irans leader is inept at saber rattling ,and yes speculators are getting rich..so what,s your solution?

RE: mantis and his electric... (Below threshold)
wave_man:

RE: mantis and his electric car conversion...

Hank: "Dale, is that you?"

MoeCurryLarryYou a... (Below threshold)
mak44:

MoeCurryLarry

You are one, or is it 3, sick Bush bedpan(s) dragging out past history, like the demented Clintonphobes that you are.

I am not necessarily an apologist for what you address, but 93 pales to the 2400 that the lying Bush has murdered. And that's only the Americans lost to his lying deception. It's also not past history but is ongoing everyday.

AND to Virgo-the would be essayist albeit sub-literate.

For the past several days I have overlooked your illiterate grammatical structures, hoping to find some nascient ability to propound a meaningful argument.

But in the common English most of us speak and write, the contraction for "you are" is "you're" and not "your" which happens to be a pronoun. You make this mistake in nearly everyone of your illiterate grunts, not to mention other sub-literate mistakes.

Most of us learned basic syntax before completing 3rd grade.

Should we assume that you never made it that far??

For gawd's sake man, even Coco the Gorilla has better usage than you, not to mention a vocabulary in excess of 1000 words, leaving you about 900 words in the dust.

Go get a banana you goon & scratch your sides.

VirgoApologies-it ... (Below threshold)
mak44:

Virgo

Apologies-it is an adjective, not a pronoun; I misspoke

wave_man,You don't... (Below threshold)
mantis:

wave_man,

You don't know who I am, but I know where you live...

;)

Mantis,Come on over.... (Below threshold)
wave_man:

Mantis,
Come on over. Coffee is ready.

Little mak44 ... (Below threshold)
CurlyLarryMoe:

Little mak44

i,ve overlooked your stupidity the past several days, but sorry pal 93 as compared to 2400? at least the 2400 had a choice in the matter yknow a voluntary military! your inability to look at the truth is truly understandable given your fallen condition! but c,mon stick to the facts man the facts.. you are truly one sick puppy.

CurlyLarryMoe Geez... (Below threshold)
mak44:

CurlyLarryMoe

Geez- another sub-literate blogger.... I can't even begin to translate the garbled crap you wrote.

Take a refresher class in composition ...& get a drool cup so you don't short out your keyboard as you pound it w/ your caveman knuckles.

MAK believeYour th... (Below threshold)
CurlyLarryMoe:

MAK believe

Your the illiterate one! if you cant read you should take a refresher class in English dialogue 101..You have the intellect of a used butt plug..shit for brains.."

atheistic troglidyte*

CurlyLarryMoeNot t... (Below threshold)
mak44:

CurlyLarryMoe

Not to turn this into a syntax class, but you must be slobbering on your keyboard again-better get your drool cup on.

Troglidyte (sic) is actually spelled as Troglodyte.

"Your" is an adjective & not the contraction of "you are" as in "you're."

I am curious; when you take a dump, do you remember to wipe you're face when your finished??

Boy, Mak, you love playing ... (Below threshold)
James Cloninger:

Boy, Mak, you love playing english teacher, don't you?

Two can play the game:

I am curious; when you take a dump, do you remember to wipe you're face when your finished??

1. Semi-colon should be a colon
2. You have "you're" (contraction) and "your" (possessive) reversed in your sentence.
3. One question mark is enough.

mak:"Your" is a... (Below threshold)
James Cloninger:

mak:

"Your" is an adjective & not the contraction of "you are" as in "you're."

"Your" is not an adjective, it is a possessive pronoun.


I am curious; when you take a dump, do you remember to wipe you're face when your finished??

Irony: Thy name is Mak44

"Your" is not an adjecti... (Below threshold)
James Cloninger:

"Your" is not an adjective, it is a possessive pronoun.

Actually, I take that back...you are correct here. One point for you, though you still have a net loss for your egregious misuse of your/you're--especially when taking another poster to task for the very same mistake you made.

But then, it's only because you cannot hold up your assertions that you take the lazy debator's excuse of grammar.

Umm, James, not to stick up... (Below threshold)
mantis:

Umm, James, not to stick up for a twit like mak, but I think he was trying to be clever and purposely switched the two.

Or maybe he's even more retarded than I thought.

MantisMantis... (Below threshold)
mak44:

Mantis

Mantis

Good for you as it was deliberate. I thought of italicizing or underlining it, but thought the irony would be obvious w/o having to call attention to it. We may disagree on a lot, but I anticipated a little critical reading.

As for Cloninger, he just didn't get it, but then that seems to be his problem across the board.

Wipe the egg off your face Cloninger & think before you fire the next time.

Umm, James, not to stick... (Below threshold)
James Cloninger:

Umm, James, not to stick up for a twit like mak, but I think he was trying to be clever and purposely switched the two.

Or maybe he's even more retarded than I thought.

1. It wasn't clever
2. I would take door number two, Monty.




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