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Operation White Wash

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by jkaras

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Big Oil cleared by FTC for price fixing
Government says no evidence companies withheld supply, but does find instances of localized price gouging.
May 22, 2006: 12:02 PM EDT

WASHINGTON (Reuters) - An investigation by U.S. antitrust authorities found no evidence that oil companies illegally manipulated gasoline prices or constrained oil refining operations, the Federal Trade Commission said Monday.

However, the agency said it had found 15 examples that fit lawmakers' definition of price-gouging at the "refining, wholesale, or retail level." It said factors like regional and local market trends appeared to explain the pricing in nearly all the cases.

Congress ordered the FTC probe last summer as part of a broad energy bill in response to a steady climb in crude oil and gasoline prices.

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http://money.cnn.com/2006/05/22/news/economy/ftc_gas.reut/index.htm?cnn=yes

It's no suprise to me that this is the way it gets swept under the carpet. I especially love the 15 instances that equate to a nation wide gouge, but no mention of the record sales profit generated inside 3 months. Maybe I'll just succumb and buy oil stock so I too can be rich.

14 replies

by dr dij

they are from selling oil to refiners at world market prices. so because the world wide sellers in other countries get more for their oil that means maybe people in this country should be kept at an artificially low price for their oil exploration?

Oil is getting more expensive to pump from ground. no new major oil fields have been discovered for quite a while. it used to be that we only had '10 years' of oil left because it wasn't economical to search for more if you had 10 years left. nowadays, it's all being used up (the easy to get oil that is).

combine that with $2000 car being unveiled in India ($3500 was cheapest previously), and millions in china (whose oil use is expanding 30% a year) and there really IS a problem with overuse. Pipelines being blown up in Nigeria, politicking with seizure of Russia's oil fields by govt over taxes, etc. don't help the supply.

there is so much red tape building refineries and a historical low 3% return on refining to gas that no new refineries have been built in US in around 20 years I'm told.

If the oil companies bought 100% of their oil at world prices, they would not be making much money.

See, all it takes is a bit of thinking instead of self-centered rants. Sure we'd all like cheap gas. I'd like a $2000 camper van too. And a house for $500/month. You remind me of a friend who is convinced EVERYTHING costs about one$ to make.

by jkaras

I understand economics of supply and demand just fine, this situation just doesnt reflect proper inflation of price. The profits would be in ratio of the needed increase. It would also be historically accurate to previous years of increase. I do not begrudge a company or anyone from making a profit, but there is a certain amount common sense variance. Oil production is not down. The main countries are producing quite enough. Only certain countries or corporations can refine the oil. We can argue about Katrina, Gulf war, or Africian conflicts that has reduced production, but none of those factors created or were responsible for record high profits. Bumps in the road doesnt stop all production.

Because I have a need for gas doesnt equate that I want everything for a dollar. I spend my money for the proper value. If I dont like something then I wont buy it if it is over priced, but gas and electricity cannot be competitivley shopped or done without. All forms of energy have profitted from this administration in record fiscal sales. Was that from brilliant CEOs making revolutionary decisions or something else? It also strikes me funny that a majority of Americans, political commentators, and media all believe that gouging is happening. We are all wrong and you're right, my bad because you are apparently a doctor or something? You have to explain the record profits if the cost has been driven up due to higher costs of business.

by puppybreath

All of the oil companies are global enterprises. Before ranting about all of the profits they've made, did you do any research to determine how much of their profits are related to the US? Could it possibly be that there is a much greater demand outside of the US and that this produced a majority of their profits?

by dr dij

scarcity of oil

price goes up
therefore gas costs more.

people who were smart enuf to invest in land, drilling, pipelines, etc. to supply the demand - why should they not sell their oil at the higher price? because they can now pump oil that costs them $50 per barrel to produce but sells for $75, do you really think they should sell it for a lower price so they make less (to help the people..??)

you say you understand economics but your post doesn't make this apparent.

like I said the refiners are not the ones making money, it just happens that some oil companies also own refineries. they are not making alot of money on the refinery part of it. where there oil comes from sources they own, they make more. when it comes from foreign sources they don't own, they pay more like everyone else.

for years many of them had marginal wells, etc.

worse than that, in 70's, previous administrations, in a bid to 'stop our dependence on foreign oil' gave tax breaks encouraging pumping of texas, other US oil. This had the marvelous effect of, for 30 years, having us drain dry texas and domestic wells. Now we are even more dependant. So much for govt meddling.

by x-marcap

The current price of oil is for spot contracts. Long term contracts are no where near $65.00 / barrel.

by maxwell edison

1. Define "big oil"? Name the companies/institutions that comprise "big oil"?

2. Define "record sales profit", and compare it to past losses and profits generated from other industries?

3. If all those "record sales profits" (on oil and gasoline) were eliminated and taken to zero profits, no profits whatsoever, how much would that reduce the cost of a gallon of gasoline?

4. If "record sales taxes" (on oil and gasoline) were eliminated and taken to zero taxes, how much would that reduce the cost of a gallon of gasoline?

5. What costs more, a gallon of gasoline or a gallon of water (which is about 10 of those 12 oz. bottles) purchased at that same store?

6. Compare the price-to-profit ratio of that gallon of gasoline with the price-to-profit ratio of that bottle of water?

7. When will there be a federal investigation into the windfall profits made by "big water"?

8. Should there be a federal investigation into the windfall profits made by "big water"?

9. Compare the price-to-profit ratio of that gasoline with the price-to-profit ratio of a meal at a typical fast-food restaurant?

10. When will there be a federal investigation into the windfall profits made by "big fast-food"?

11. Should there be a federal investigation into the windfall profits made by "big fast-food"?

12. Break-down the cost of a gallon of gasoline, and describe where it all goes?

13. Why are you up-in-arms about "big oil", and not "big-anything else"?

by pennatomcat

I was going to make the same point using the price of a gallon of milk as an example. It's an easily renewable source that is quickly and inexpensively processed. Last time I checked, though, it was a bit more expensive than a gallon of gas.

I do have one question, though. Why is diesel heavily taxed to the point that it is much more expensive than gasoline? It is an inexpensively produced byproduct of gasoline refining. Keep in mind that, since everthing you own or consume is delivered by truck, artificially high diesel prices increase the price of EVERYTHING that you purchase.

by maxwell edison

The "big one" being the "big lie".

Sure, to point out the "profits" of the entire industry (any entire industry, for that matter) might sound like it's a good argument to make, but where do those profits go? Do people think they stuff them under their oil rig? Moreover, divide ALL those annual "profits" by the TOTAL NUMBER of gallons of gasoline sold in the United States each year, and my guess is that it wouldn't even equal even a penny a gallon. (Yes, it's just a guess.)

People let their emotions overtake their reason on a lot of issues, and this one is no exception. In fact, it might be one of the worst examples.

And Bill O'Reilly is one of the biggest scare-monger demagogues who go after "big oil". (He's almost as bad as the Democrats!) A friend of mine listens to him, and he's constantly spouting off similar nonsense. He once told me to not buy gasoline on Sunday. Yea! That'll show 'em!

by jkaras

Max here ate two links that are re-occuring on the subjects rather than paste the multiple articles. They make points that you brought up as well as point out things are not quite right.
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR2005102700449.html

http://www.statesman.com/business/content/business/stories/other/04/27oiltax.html

1. Listed in the articles. Exxon, Shell, and others

2. The articles reference what has been deemed record sales profit by many corporations including your "other entities that are apples to oranges.

3&4. I cannot calculate because I dont have all the data for total costs, but it should still reflect its history of increase, coupled with basic supply and demand.

5, 6, 7, 8,. You cannot compare a needed commodity like gas/oil and water. Water is a necessity of life to live however water doesnt control world economy. Oil does. Without oil no product can be manufactured or transported, or transport humans. Water is a luxury. Everyone can drink from a water fountain or tap water. People have a choice whether they want filtered water, gas runs the world. You or I cannot live without it. We need it transport ourselves to make money, heat our homes, transport our families, etc.. Could we use less and strive to heat with wood, ride a bike to work, or any other nonsensical(right spelling? probably not)environmental idea of enlightened living.
I am for better environmental programs and do think we have a problem, but hippie alternatives are not the answer. we are a nation and world dependant on oil because our leaders made that so by not producing adequate mass transit and spralling cities. If mass transit was the defacto standard of transportation then we wouldnt have as much of a dependance on oil. We can only attempt to correct the wrong previous decisions that encorporate what is best for society, not for big corporations and greased politicians hands.

9,10, 11, 13. Again you cant compare a luxury item with a necessity. Nobody has to eat fast food, people choose to because they are lazy to make a nutricious meal. They can cook something, go food shopping, or what have you. Demand gives them the right to set their prices. I get where you are going with demand fueling (ok bad choice of words)the rise in cost of oil, but again it's a raping of the consumer due to lack of choice. That is the fundamental difference of the anger towards the greed. I have said before in this thread as well as other threads concerning capitolism that I am for profit, but not at the sake of bankrupting the people. There is a difference, and no argument you give is going to justify record sales. Those records are not from a result in higher prices at the pump, they are higher profits following the costs. You have the executives getting millions in severence pay, while millions of American's are earning less, higher costs in trying to provide for a family/college, reduction in private business not corporations, all resulting in the greatest reduction in the middle class. Tax breaks to the most wealthy. When I say wealthy we are talking millionaires, not you and I making anywhere from 30k-200k. Our country has been sold out from under our noses by our leaders for years, and enough is enough. That is my opinion like it or not. Ask yourself are you or others better off today than from yesterday? What will your children and their children inherit at the current rate? Will they have a full life like got to enjoy?

by pennatomcat

methanol and/or hydrogen?

While I'm waiting for an answer, I'll take a long ride on my 50 mpg Harley. (why do I have the feeling that you drive a big SUV?)

by jkaras

It's a '97 with 171k miles on it. I hate suvs because people who drive them have no idea how to drive them. Its pure status symbol and very few practical use. The only gas guzzler I have owned was a '68 Camaro from when I was 16-31. During the last 8 years I owned it it was parked in the garage collecting dust unable to part with my car. I have only owned three cars in my life. The first was another '68 Camero that got stolen only after owning it for 7 months before the other camaro replaced it.

The hippie alternatives that I was mentioning was solar solutions, non wood houses for composite or metal supports, over priced hybrid vehicles (these are step in the right direction but not an answer by themselves), recycling everything when few people even attempt or only partially recycle. Like I said they are good ideas to help but not the cut and dry solution. I will conform to well thought out plans that benefit mankind, but not over priced band aids. I would like an alternative fuel for many environmental resons, but I dont want to be Willie Nelson, running my vehicle off of recycled vegetable oil from fast food companies or what have you or a solar vehicle. If metanol or hyrogen can do the job and can be marketed to the populaces in a fair way I will support it, but think who will be able to afford the change. Will their be a conversion adaption to current vehicles or have to buy a new over priced vehicle?

Car manufacturers keep making gas guzzling giants, not practical cars, let alone safe ones. The problem we face with oil is quite huge, but the biggest problem is the greed it represents because we have no choice being so dependant on it for everything.

I am glad you are not the type of person who has rediculous vehicles that ruin the environment. My point was there are many ideas touting that they are the solution and they are far from perfecting their idea to make the impact we need. Our economy cannot afford a huge shift to divorce ourselves from petroleum products like a drug addict going cold turkey. It's just my opinion and frustration at the whole problem that our so called enlightened leaders were supposed to protect us from and didnt, they instead took bribes from major big corporations not looking out for you and me. If you dont see that point then I guess we just disagree, which I have no problem with. That is what America is about, the right to voice your opinion and disagree without fear. CYA.

by pennatomcat

The "hippie alternative" statement threw me off. Our opinions are more similar than you might believe. Sorry about the SUV dig. I should have given you a chance to explain further.

Conversion to ethanol can be easily and inexpensively accomplished by both distribution points and vehicle owners. Brazil has already done it!

(I loved my old Camaro, too)

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