Terrible Tom <SilverEightynine@aol.com> wrote:
> Jason Bleazard wrote:
>> I have to admit, part of my motivation for wanting to use less
>> fuel is so I can give The Finger to Petro Canada, Exxon, Shell,
>> and the whole lot of 'em. Friggin oil companies are professional
>> pirates, and I'm tired of helping out so much with their constant
>> string of record profits.
>>
>> Sorry. Rant over.
>>
> I hear ya loud and clear. I'm also tired of this political fuel
> game. [...]
I debated whether I should comment on this, and decided I probably
shouldn't, but I am going to anyway. :-) There is a saying, "A lie
left unchallenged becomes the truth", and although I don't consider
what either of you said to be a lie, I do consider your statements to
be misconceptions, and I feel that the same thing holds true - a
misconception left unchallenged will also become the truth...
I will make this relatively* short as I don't have a particular
desire to get into a big debate right now, and anyway the facts are
out there and easily checked if one approaches the subject with an
open mind. (* - longer than it should be, shorter than it could...) :-)
Although the oil companies are reporting record profits, it has
nothing to do with price gouging, and it doesn't even have anything to
do with the price of gas, really. Its basically a matter of volume.
The oil companies are selling a *lot* of product, and in a situation
like that, as long as your per unit costs are below your per unit
price, big numbers are going to be generated. From a strict
profitability standpoint, there are a number of industries which blow
oil companies right out of the water. On average, the oil companies
are making somewhere in the neighborhood of 10 cents per gallon. That
is their total profit. Although it has become something of a cliche,
I think it is beneficial to compare this to the taxes you are paying
on each gallon; anywhere from 25 cents to 70 cents, depending on where
you live! (That goes for the US, I'm not sure what Canada's fuel
taxes are, but I'd be extremely surprised if they aren't in-line or
higher than in the US.) So, on a 20 gallon fill-up for which you paid
$60 (assume $3/gallon), $2 of that is pure profit for the oil company.
Anywhere from $5 to $14 of that is state and federal taxes. The
remaining $44-$53 is split between crude oil ($33-40) and the costs
associated with refining, distributing, etc. ($11-13)
The oil companies make the same amount on a gallon of gas whether
it is $1 per gallon or $4 per gallon, because the majority of the
variability of the gas price is directly tied to the price of crude
oil, not the amount of profit that the company decides to take from
each gallon of gas. If the oil companies were to suddenly decide to
operate as non-profit charities and charge only enough to meet the
costs of production such that they would merely break even, and have
no profit, if the price of gas were $3/gallon, the new price would be
$2.90/gallon. The oil companies are simply not making enough profit
per unit to affect the gas prices in any significant way. Compare
this to the price of crude oil. If gas is at $3/gallon with
$70/barrel crude, and the price were to drop to $50/barrel, gas would
drop to about $2.60/gallon, or were it to go to $30/barrel,
$2.15/gallon. (Get rid of those stupid state and federal taxes, and
these prices drop to as low as $2.30 for $70/barrel crude, $1.90 for
$50/barrel crude and $1.45 for $30/barrel crude.) There are other
factors which influence the price of fuel beyond the raw crude oil
price, most notably, good old fashioned supply and demand, but oil
companies "setting" high profits for themselves is certainly not one
of these factors.
In fact, the oil companies would have much higher profits if the
price of gas were to drop. They make the same amount of profit per
gallon no matter what the price, so anything that increases
consumption will increase their profits. High gas prices cause
consumers to tighten down, buy more fuel efficient cars, take less
trips, etc. If gas were dirt cheap, people would use a heck of a lot
more of it, and the oil companies would see profits that would make
their current financial picture look positively Mickey Mouse.
The bottom line is that the oil companies have no incentive to keep
gas prices high, and in fact, have disincentives to do so, not only
from a publicity standpoint but from an economic one as well. In
fact, the oil and gas industry has been audited by the US Government
an average of 1.5 times per year for the past couple of decades, and
no evidence of any sort of price gouging, price fixing, etc. has ever
been found.
There are certainly factors which are artificially inflating the
price of gas, but they have to do with governments butting in with
taxes, restrictions on building additional refineries, getting in the
way of oil exploration and new drilling, etc. Since these governments
are elected by the people, the only logical conclusion that can be
drawn is that a big reason why gas prices are so high is... us!
However, class warfare rules the day; the same types of people keep
getting elected, and the populace which is responsible for this seems
to be happy to continue in their blissful ignorance, not understanding
how things actually work, and apparently unwilling to take the time to
learn. I am not directing that statement to anyone on the DML, it is
just a generality to lead me to the conclusion that for anything in
this world to change for the better, be it gas prices, politics,
crime, education or whatever, people need to start basing their
decisions on facts, logic and proven principles as opposed to raw
emotion and good intentions. It is tempting to blame our woes on
others and it is easy to fall prey to this sort of seduction, but when
one looks beyond the emotion and gut reaction, quite often a
completely different picture is revealed. If we wish to live in a
fantasy world fogged by misconception and delusion, that is certainly
our prerogative, however I prefer the sharp focus of reason and truth.
It is in this spirit which I post this message. Someone reading this
may very well decide to discount it and continue with their
preconceived notions, but hopefully it will sow a seed of doubt which
may spark an interest in digging beyond the status quo. I'm not
asking anyone to accept what I say as gospel, but to do the research
and draw your own conclusions. Be they right or wrong, if your
viewpoint is challenged in the future, at least you can be secure in
the knowledge that you made a diligent effort to discover the truth,
which is an infinitely better starting position than mere intuition.
I am one of the biggest tightwads anyone is likely to come across;
I hate to spend money unnecessarily and insist on getting the best
value possible at all times. I am extremely annoyed at the current
gas prices and cringe every time I have to fill up, but to place the
blame at the feet of the oil companies is to miss the mark entirely.
--
-Jon-
.- Jon Steiger -- jon@dakota-truck.net or jon@jonsteiger.com -.
| '96 Kolb Firefly, '96 Suzuki Intruder, Miscellaneous Mopars |
`-------------------------------- http://www.jonsteiger.com --'
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