Told Ya So
Remember those warm and fuzzy $2.05-gasoline prices from last October? Ah, good times, good times.
Well, it’s looking like oil companies really did manipulate the gasoline supply last fall, in an effort to keep the GOP in power:
By the second week in October, gasoline prices fell 70 cents from summer’s record highs. Refineries were running full throttle and America’s gasoline inventories were up nearly 7 percent from the three previous Octobers.
The rise in supply came despite BP’s major pipeline disruption in Alaska. Ordinarily, that’s an industry excuse to shrink supplies and raise prices.
Now, the oil industry claimed pump prices fell because crude oil prices dropped.
But gas prices dropped far more steeply than crude oil. Crude oil comes in barrels. There are 42 gallons in a barrel and the price of each gallon was down 10 cents this October over last. But gas prices fell 61 cents a gallon over the same time last year.
In other words, in the run-up to the election, oil companies cut gasoline prices 500 percent more than their raw material cost fell. And it wasn’t because refining and distribution costs rose. They’re relatively stable.
Oil companies simply took less profit from their refineries for a short period of time. Could it have been to influence a political outcome?
Yeah, big shocker. I know, I know, some of you conservative types are so attached to your notions about “free markets” and “supply and demand.” It’s rather cute, really, this idea that the oil market operates like some kind of neighborhood lemonade stand. Sure it does, if you imagine the owner of said lemonade stand also owns the lemon grove and the sugar plantation and the cup manufacturer and the ice machines and the kitchen where the lemonade is made. And imagine the lemonade stand owner also makes the lemonade, and then imagine that the entire neighborhood is dependent on maintaining an adequate supply of lemonade to keep panic from crashing the neighborhood economy. Sure, it’s really the same thing.
I’m going to go out on a short limb here and predict another big jump in the coming weeks; by summer, look for $3/gallon again.
Sure, the American Petroleum Institute has launched a major PR offensive now that the Democrats are in charge and eager to collect all those royalties the oil companies keep forgetting they owe us taxpayers. They may try to keep gas prices low just to look like nice guys for a while. But ultimately, that’s not going to work. Everyone knows the oil companies are a bunch of Greedy Old Pigs, and the GOP won’t be around to help them out in Congress. They are going to do what they always do: stick it to consumers.
Happy New Year!