Big Oil Price Gouging

Last week, in addition to being treated to a couple of juicy political stories, we also had the pleasure of learning that Exxon-Mobil profited in excess of 45 million dollars per hour during the third quarter, otherwise known as the Katrina Quarter. In fact, nearly all of the oil companies saw record profits during the Katrina Quarter, all the while we were paying record prices at the pump.

Oil industry insiders make themselves feel better by blaming this simply on "supply and demand" and by forwarding emails containing pictures of Middle Eastern royalty and their golden jet planes and lavish accoutrements. As if it was as simple as that...

I'm not buying it and it's about time people call it what it is -- price gouging. Why should it simply be "supply and demand" when the oil industry loses refineries during a hurricane and raises the prices 50% at the pump but "price gouging" when a hotel raises its rates during an evacuation? After all, haven't the available supply of hotel rooms decreased? Hasn't the demand gone up? Same with grocery stores, lumberyards, and - what's this? -- gas stations. It seems that as far as Big Oil is concerned, there's a double-standard. Only the little guy can get busted. Some of the first recipients of price-gouging penalties were individually-owned gas stations who severely raised the prices of their gasoline (some to $5.00 a gallon).

But what about the guys in the suits selling these stations their gasoline? They're charging more too -- because they're supply has been limited due to the loss of refining power -- but why are they exempt from the price gouging lawsuits when hotels and stores -- following the same laws of supply and demand -- are not.

And you know what stinks the most of all of this -- demand for gas was actually down. Even President Bush himself went on tv talking about limiting use of the Presidential motorpool and asking Americans to conserve fuel and not drive as much. And newspapers coast-to-coast carried accounts of reduced driving habits (not to mention school was in session and summer over so miles driven was down anyway). But they still made record profits. I don't know about you, but if I have four facilities that make me money, and I lose one of them to a natural disaster, I can expect to earn less money until that facitility is back up and running. I would not expect to turn in record profits.

Fortunately for us, not all Senators are shills to Big Oil and next week, many of them are planning to ask industry executives for some of that money back in the form of donations to public causes such as those affected by the storms. And if you need further proof that this whole thing stinks worse than a roadside refinery, all you have to do is see the list of Republican Senators on the hunt as well. Seems even some Republicans can lift their heads from the trough long enough to do what's right. Who knew?

***And since I can't stand it when people forward me emails without sources, here's mine:


Darthb0b0 said...

Slight correction. Exxon (and I'm not defending them) recorded $45 million in revenue per hour, not profit. Huge difference. We're still being gouged though.

Doug Walsh said...

You are correct, sir. Revenue, not profit. But 9.9 billion dollars in net income for a 3 month span? No matter how you slice it, that's enormous.

Like I said in the article, if I have four facilities that make me money and one goes down, I expect to take a loss, not post record income.