From NY Times:



This has been atleast 2, and if I recall correctly even more, record setting profit years Exxon Mobil has had, while we continually see gas prices increase as well.

Questions for Debate:

Are we being priced gouged at the pumps?

Should Congress take any action against these company(ies)?

Questions for Debate:

Are we being priced gouged at the pumps? No. ExxonMobil is a huge company that had total revenues in excess of $371 billion. EM has a lower profit margin than pharmaceuticals and banks.

Should Congress take any action against these company(ies)?No, although I wouldn't mind seeing the mergers in the oil industry over the last few years reversed. Aside from that purely personal preference without any rational basis, Congress should keep its nose out.

Some recommended reading: Ben Stein on Oil

Are we being priced gouged at the pumps?

Here's how I understand it, which is not very well. Crude, gasoline and heating oil are commodities. Contracts represent the purchase of so much of any commodity. These contracts are traded up to a point where someone has to commit to the price, meaning actual businesses who need the commodities. Up to that point, people who have no interest in obtaining the commodities themselves drive the prices. At the end of the run, shortages and surpluses in the commodities determine if they will be expensive or cheap.

So you get a Katrina driving the prices upward, high output driving the prices downward. Seems simple, eh? But then you get prices dropping after Katrina's initial spiking. What happened there? You've got me. Congress was complaining to oil execs, so maybe that had an effect. Or maybe imports helped out, what with the Venezuela deal. Or the refineries hit in the hurricanes came back online quickly.

The situation is complex enough that gouging could be going on, just in a way that most people can't see. So what are you going to do? Stop buying gas, heating oil, natural gas, electricity? Naw, but you might opt for buying efficiency over waste.

Should Congress take any action against these company(ies)?

I don't know what Congress could do to better stabilize fuel prices, other than going for developing alternatives that provide plentiful energy at low overhead costs and draw on energy sources that have stable supplies. Geothermal and tidal currents are stable and reliable sources. Hydrogen is a good way to store the electrical energy generated from the sources. I suppose we could figure out other storage chemicals too, stuff that doesn't pollute.

The best thing that Congress can do is to make oil and natural gas obsolete as energy sources. That will make lots of people happy, oil execs can change careers to alternatives, and certain family empires will crumble into the dust of history. Or not, if they are smart.

This discussion topic is a clear example of a lack of competition in the marketplace caused by inadequate monitoring of the marketplace by our economic regulatory policy. It is basic economics, taught at the 100 university level, that a monopoly or an oligopoly will lead to exactly the situation we have seen with the oil companies.

Bikerdad is on the mark for identifying this problem. This problem is not just an oil company problem but affects many aspects of the U.S. market. The problems from allowing the reduction of competition in the marketplace will be growing. This is just a beginning. Statistics are there which echo the problems, the symptoms of the disease. The wealthy are becoming more wealthy than the average person. There are more calls for government regulation of prices. There are shortages. There are obscene profits.

We need to tighten government regulation for monopolyism and coercion rather than become a socialist state via legislative control of prices, government subsadizing the energy business, or adding gouging laws.

Not necessarily true.

The oil business has a high capital cost associated with it--in other words, a built in barrier to entry into the market. But that barrier is not created by the lack of regulation.

In fact, regulations are part of the problem. The inability for new refiners to start up is largely due to existing regulations, not the lack of them.

If we relaxed some of the regulations to start up new refineries, more competition would spring up which would (theoretically) put pressure to lower prices.

Of course, it isn't that simple. Not only is petroleum sold in a commodity market--refined gasoline is also sold as a commodity. As a commodity, it is subject to some very peculiar price pressures. BP New Zealand has a nice Q&A section that discusses pricing of gasoline (er, petrol). Notice that the price of petroleum is one of the highest cost factors, not the profit of oil refiners.

Here is another breakdown for the US. Taxes are lower in the US and thus the breakdown is different.

What nobody talks about is the amount of money that goes to the petroleum suppliers. It only costs about $5 a barrel to pump oil out of the ground and that cost is pretty much fixed. It is selling for $60 a barrel. Of course, sellers do not set the prices either, the market does. The demand for petroleum is high and thus so is the price.

Primer on gas costs

It is simply appalling that the Democrats want to use this as a campaign issue: Democrats see winning issue in oil company profits


While it's true the oil refiners do not need subsidies we should also keep in mind that we need refiners. We should cut some of these regulations and allow more refiners to get into the game.

You have brought up a different type of regulation than I had in mind , Amlord, and yours is valid one. Over regulation on internal business decisions such as materials and equipment can raise the costs. There is a trade off between safety and costs. One of the disadvantages to such regulation may raise the bar for establishing new competitors.

My use of regulation was directed specifically at economic regulation. There has been a consolidation of the oil businesses which has reduced competition. Economic regulation needs to be in place which protects the market from the short term economic advantage to businesses when they can create a monopoly by decreasing competition. This economic regulation is not industry specific and would apply to all business activities.

Clearly Exxon is benefitting from a position of market power.

But I don't blame Exxon for making as much as they can. I blame the American people for electing oil-friendly dupes to run the country.

If you don't like being held over a barrel (no pun intended), elect a member of the green party. Otherwise, the special interests like pharmaceutical companies(Bikerdad mentioned) and oil companies are going to make a lot of money off of you.

Personally I like to see higher energy prices as it uses market forces rather than useless political pressures to get alternative energy agendas acted upon.

For all the chirping about Exxon, I still see a large share of Hummers and SUVs on the road.

Sigh. I tire of pointing this out, but here goes again....ALL of our administrations have been oil-friendly. Why? Because, currently, oil is absolutely vital to our economy. We couldn't get along without it. In other words, if we elected some non oil friendly dupes everyone would be wondering what happened to the economy, and complaining about $5/gal gasoline and high taxes. Who'd be the dupes then?



Which is really the only way alternative fuels will be implemented in the US, and also why pure market forces will solve the oil 'problem' all by itself.



Couldn't agree more. Therein lies the problem. People in the US like using gasoline. They might talk about alternative fuels, but it doesn't get beyond that stage, and won't until alternative fuels present a true viable alternative, both economically and functionally. Until then, rather than complain about Exxon's profits....why not buy some stock?

Not ALL. Jimmy Carter wasn't.

Supposedly Bush is going to state in his State of the Union that we need to get off FOREIGN oil...not necessarily oil.

But we need a president who forces the issue of change.

I agree that market forces will push the issue. But as some experts point out, it might be a huge problem if oil jumps sharply in demand with limited supply, see the 1970s times 100.

I see no problem with regulations on MPG or investments into a new infrastructure. And you could fund it all with taxes on gas and oil.

Yes, even Jimmy Carter's administration. What major impact did anything done during his administration have? None...otherwise we wouldn't still have this problem, would we? Carter may well have had intentions of being different...until confronted with the sheer enormity of the problem. Oil is used for EVERYTHING. Clinton talked about alternative fuels, too. Yet, here we are still. The simple fact is that our government can't afford the type of massive investment moving significantly away from oil will take.



I'm all for alternative fuels. However, I have yet to see any way to push the issue without massive tax increases. Given that, I prefer oil (as clearly do most consumers, otherwise we'd all be out there using the alternatives currently).



Much ado about nothing. If oil jumps sharply, then alternative fuels will replace it. The technology already exists, it is purely economics keeping them from being implemented. The strategic petroleum reserve is in place to resolve short term issues. Besides...the oil supplies need to sell to us even more than we need to buy from them. So, it's hard to imagine any realistic scenario in which our supply of oil would change so drastically we wouldn't be able to adapt.



You might not...but most taxpayers do. As you stated above...there doesn't seem to be any shortage of SUV's on the roads, does there? Everyone wants alternative fuels, but almost no one is willing to sacrifice anything to get there. Look at the outcry that $3/gal brought on? How many would support significantly higher prices than that, along with corresponding increases in everything else? Pretty much no one. Which brings us right back to market forces having to solve the problem. Is it possible a President could use his bully pulpit to change some of these dynamics? Probably. Is there anyone out there in either major party that seems willing to do that? I don't see it happening. You'll see lots of rhetoric, but nothing of substance. They'll do this because they know that telling the American public what would really be required is probably political suicide. You see anyone out there actively campaigning for $5/gal gasoline?. If anything, the Democrats, the more likely of the two parties to push for the required changes, have been the ones lambasting the current high gas prices. They can't exactly turn around and push for even higher ones now, can they? So, its just not going to happen, not for quite some time.

Were you around in the 70s? It surely was NOT ado about nothing.

You can start here:

http://www.oilcrisis.com/

You're right, everything is done with oil. And that in itself spells disaster if oil ever becomes very hard to come by.

It is a real problem. THe "market" is not a silver bullet. It's like assuming that these deficits and debts will just transition at some point due to "market forces".

There's a lot of PAIN associated with transition. We can do it now and with more comfort or we can wait for a monumental disaster to occur.

We didn't have the strategic petroleum reserve then, alternative technologies weren't developed then, and the Oil Producing countries weren't as dependent on petrodollars as they are now. In fact, the oil crisis then just goes to prove my point...we did survive it, we did create alternatives, and we did create a buffer supply.




I'm not arguing the problem (well, somewhat, I don't think most people realize how truly dependent our entire economy and way of life is on oil, and therefore don't grasp the magnitude of what it would take to transition away from it). I'm arguing the feasibility of implementing a solution.



Exactly. How many politicians do you know that run successfully on a pro pain platform? Pretty much none. So, how many politicians are willing to champion such solutions? Again, pretty much none.

Here is a question for you all. One of the main reasons that Oil in the US remains at such a high price is the lack of refining capacity. I remmber clearly that when oil proces spiked in the first gulf War, people were claiming that it was not due to lack of oil, but the inability of the US to refine the oil due to lack of capacity.

In 1992, the Saudi King even issues a statement saying they could increase oil shipments to the US, but it would do no good because the US could not refine it all. During Gulf War 2.0 and during Katerina, the ame calls were being made, prices were spiking due to lack of refining capacity, or because of threat to the refineries.

For decades now it seems the consistent bottleneck in the US oil industry, and the primary reason for high prices is lack of refining capacity.

A bit of research on the web has shown that the refining capacity of the United States has actually DROPPED by 12 per cent since 1980, while oil demand has more than tripled.


So imagine my surprise to find out that the US has not constructed a new oil refinery since 1976. There are several reasons for this, the cost of building one is high to start, but the primary reason why there have been no more refineries is brutal resistance from the existing oil companies. Because the lack of refineries keeps the price artifically higher, the main oil companies have no incentive to build more, and they hve intervened several times over the last few decaded to buy out or shut down smaller companies trying to build new refineries.

They have actually used their near-monopoly and market clout to kill companies who wanted to expand refining capacity. This bullying has finally been noticed, a 2001 congressional investigation uncovered internal memos written by the major oil companies operating in the U.S. discussing their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. From 1995-2002, 97% of the more than 920,000 barrels of oil per day of capacity that have been shut down were owned and operated by smaller, independent refiners. Were this capacity to be in operation today, refiners could use it to better meet today’s reformulated gasoline blend needs.



So hopefully we now have a different point of view on wheither the Oil companies are 'gouging' the people. Not only are they doing so, but they are deliberatly weakening the energy infrastructure of the US for increased profit margins.

But if you improve and increase the refinement capacity, doesn't that mean that it the oil wells around the world will become depleted even more quickly? Isn't the good thing about oil prices rising the fact that Americans are beginning to, for example, call for cars that use less petrol and are starting to think about good alternatives?

Sure, people survived the great depression, people survive shark attacks and many people survive Kemo therapy....why is that conservatives always act as "if you don't die, it's ok"?



Personally, the 70s stunk. And despite the oil reserves we're still consuming a lot of oil. How long do the oil reserves last?

I agree with you that politicians generally have no stones to fix this problem, but to say it's no big deal is way off the mark. It is indeed a big deal.

I think the main reason for a lack of new refineries is because of resistance from the people themselves. Most people, including myself, would not want a new refinery in our backyards. Believe me, refineries have a very disgusting smell around them.

If the government really wants people to carpool and use energy more efficiently, then it should cut its highway spending. City councils around the country deregulate some of their zoning regulations and allow small businesses to open their shops in residential areas, thus eliminating those car trips to the Walmart.

Lack of oil is not and will never be in our lifetimes the problem, lack of cheap oil will. This will change our lives and we better just get accustomed, its not the 70's anymore.

Im *** NOTICE: THIS WORD IS AGAINST THE RULES. FAILURE TO REMOVE IT WILL RESULT IN A STRIKE. *** off that my natural gas heating bill is through the roof for no good reason. I may drive a bicycle or a hybrid or use my car less, but there was nothing I could do that would stop a natural gas company from hiking my home heating bill 20-40% this winter. This IS gouging. My electric bill also has a fuel surcharge.
I know noone but credit cards and loan sharks that can get away with a hike of these levels based on.....um, well, nothing. Crude prices are not equivalent to natural gas prices except in a world of Congress and Oil and Gas Company corruption.
In a testimonial to Congress, companies claimed that there was a sudden shortage of natural gas. Thats interesting, because in previous years they claimed that if gas prices didnt go up and sustain at higher levels that they could not afford to build pipelines.

While record profits are sustained by our oil and gas providers, they claim to have no money for exploration and development, unless we pay the price, in more ways than one.

A smarty pants says by stock, sure, thats for people who have a few thousand overflow in their bank account to gamble. A share in oil stock costs between $100-200 a share, how far will that get you?

People here are saying that they want higher oil and gas prices in order to beat home the idea that we need to conserve. Thats just insane, the only ones that will pay are the ones already strapped, the ones that already Do conserve what they can.
I see Hummers on the road, but they are not the average person. They are rich and do not care, they are GOP'ers who get big tax cuts and have never conserved a thing in their life. I conserve water, electricity, heat, clothes and throw away goods and have most of my life, because Im just one of those stupid hippies that gives a damn.
To Congress:
I want to see these high using vehicles and houses, the rich 'wasters' taxed to extreme burden, not given tax breaks. Time to even the expense load to a more equitable per capita of use and abuse.

This is a very misleading statistic. It doesn't take into account expansion at existing facilities.



From Energy Information Agency



Or, as is actually the case, the low profit margin at refineries is what is driving these actions. As shown above, refineries have expanded in size to take advantage of economies of scale. This allows refineries to operate on the very small profit margin they have. This has been the driving factor of the tactics you allude to (but provide no evidence of, I might add). In other words, if it weren't for these tactics, some of these refineries might have to be closed, reducing national capacity rather than increasing it. Regardless, it's very hard to equate low profit margin with gouging.



(I had a link during a previous debate indicating even lower margins, in the 2-3% range, but, alas, can't find it now)

So, the scenario we have is that current refineries are bases on a model of very high capacity and very high utilization. Oil companies don't want new refineries built because it will reduce utilization at current facilities rendering them unprofitable. Considering the huge amounts of capital they have tied up in these facilities, this is quite understandable.

Now, I'm not against the creation of new refineries. Since demand continues to rise--and as Katrina showed--new refineries are probably essential. But, in order to get there, it's important to fully and accurately understand the dynamics that have created the current situation.



I don't know. Why is it that liberals always act like if the government doesn't fix it, it won't happen?



What are the stupidy pants saying?

And, if indeed gouging is going on, why would such an investment be a gamble? Everyone should have money saved for retirement (unless they're relying on the rest of us to pay for their Social Security, which is a different debate)....so, the question is merely what to invest in. The point being that it would seem to make sense for those decrying price gouging to put their money where there mouth is. This would not only be profitable, but also give them a greater voice in how that company operates. This is how capitalism works. Or is this smarty pants talk again?



Ah, I see. Could you please provide the links with evidence for this conclusion?



I believe my argument is being misunderstood. In no way am I trying to indicate this is no big deal. Quite the opposite, in fact. It is an almost unimaginably huge deal, which would require almost unimaginably massive investment to fix. It is in fact the sheer hugeness of the problem that prevents the government from taking effective action on it. Any such programs would require such huge investment that the funding of them would require massive tax increases that no politician is willing to propose. Oil is, quite literally, used for EVERYTHING...if not outright, then as a component in a product, or in the machines that made, or the system that transported it to market. So, along with those massive tax increases, we're likely to see large price increases as well. So, the government has done what seems to be the most pragmatic thing...take steps to ensure the supply of oil for as long as possible, allowing market forces to develop and implement alternatives. I'm not against moving that process along, and for all the reasons you would likely cite. However, I think far too many people lack an appreciation of the real magnitude of the problem, and what it would really take to move away from oil...problems which tend to render many proposed solutions unfeasible.

1) During the hurricane last year I would say yes to intermittant price gouging.

Overall, no. In fact I would argue that between 98-02 there were instances of premeditated oil glutting to keep the price around 10 cents a gallon. The people were ripping off the oil companies.

2) Getting congress to legislate a solution will not solve the problem. It will make the problem worse. Congress does not understand that over half of the oil consumed is exported from foreign markets. They think it is still 1978 and they can bargain their way out. I've got new for you, there are more customers today so these oil producing countries can look to new emerging markets.

The short anwser is congress will gain nothing from a windfall profits tax.

There is good material out there and I would start with Mathew Simmons and Matt Savinar.

Ok, you are kidding right? I need stats?
Lets reverse my post. Hummer drivers are 'average' people, regular folk, just like you and me, in fact I was thinking about picking one up the other day when I was out shopping. They are NOT rich. They are Democrats and conservationists, perhaps Greens who conserve water and electricity but just have this one quirk in their personality that wants to drive a vehicle that uses exorbitant amounts of gas for personal fun. They may even live in the projects, and drive a hummer. They always conserve, except in this ONE thing.



WOW, this really shows how disconnected some people are from the reality facing a good part of the nation. Firstly, Social security is a pay in pay out. Unless you are dirt poor, noone is paying your social security for you. If you dont PAY in you dont GET SS. The belief that you think everyone should and can have money saved for retirement, open to investment opportunities, not locked up, makes you incapable of understanding that 1. Many people live paycheck to paycheck in this country, with a lack of basic needs as well, having trouble paying their heating and other utility bills, raising families and just getting by.
2. Many workers do not have benefits and investment plans. They are simply not offered with the type of work they do, almost all service employees.
3. It takes about $2000 to set up a private investment stock account, which can seem like a big gamble to people who dont have much money to gamble and possibly lose on ten shares of oil stock. Or they are afraid to lose the few dollars they have.
You take your own knowledge, and income, as common, as if stock investment is everyones privilege, benefit and don, like a magic quik fix for everyone, its absolutely not true and a gamble even for those that follow diligently.

Many of us lost in our 401 k plans over the last years and continue to do so. If you have 2 or 3 grand to spare, or forget that your car needs a new transmission, funds that arent going to your kids education, get 10 shares of Conoco, whoop-de-doo! That should solve your gripe , and dont complain! Watch your funds climb sky high! Tell every american that gripes about their utility bill, hey, buy shares! Make them acountable, all you need is a few grand to gamble on oil, Iraq is going good, we'll soon all be 'in the money'!

I think oil stocks are a good investment, but I know that many people dont have that luxury and they PAY.



On this I am completely in agreement and feel that the average person and the Hummer/wasteful of resource user is in denial and we are NOT educating anyone as of yet. Shame.

We are in BIG trouble. In 200 years we have used half of the available fossil fuels on the planet. The backside of this is going to be ugly. Its going to get alot worse. Take pictures and remember $3.00 a gallon and Hummers. Thats going to be the olden days in our lifetime. Not only that, our entire lives will change. We will see a breakdown of civilization as we know it.
Hobbes, I wrote about this in Peak Oil, and everyone said, oh, it wont be a big deal. That was a mere year ago. Supposedly alternative fuels would fix the problem before then. I think we are late.

Questions for Debate:

Are we being priced gouged at the pumps?

No oil companies do not set the “pump price” gas stations do and you can be sure that the “profit margins” of oil companies are looked at closely by the Government.

Should Congress take any action against these company(ies)?

NO. Especially since the government does not spend any where near the amount of money on alternative energy that we need to develop the technologies. Oil (Energy) companies invest billions from their profits in research.

Are we being priced gouged at the pumps?
No, we pay way too little. That's not to say the oil companies should make any more. The real issue is there really is no honest pricing of oil. Ideally every product, oil in particular, should reflect its actual cost. Three costs that aren't included in the oil costs are the Pentagon costs (Cost of protecting our oil sources), environmental costs (Cost of restoring air water and soil from the depredations of oil use), and health costs for, for instance, pollution induced lung problems.

If a real free market prevailed then energy approaches with low down stream costs would be in a better position to compete with those that have high down stream costs. As of now the down stream costs are largely publicly subsidized which gives the gun boating polluters an advantage.

Should Congress take any action against these company(ies)?
Any action taken against the companies should principally revolve around the public costs they induce.

"But then you get prices dropping after Katrina's initial spiking. What happened there?"

Good question, AuthorMusician. Let's see if I can bring to your memory some of the data we all saw that might throw some light onto this question.

I am a long haul truck driver, and as you can imagine we are very concerned over fuel prices since we burn about 150 gallons of the stuff each day.

In the weeks after Katrina, both gasoline (gas) and diesel (fuel) prices moved up together. Generally, gas enjoys a 5%-10% less price than fuel, but after Katrina their prices were about neck and neck.

Just after gas hit $3 a gallon, its price began to decline, but fuel remained above $3. Two weeks after Katrina, gas was selling at a 20% to 25% discount to fuel, and fuel prices remained very constant. (Not much price fluctuation at all in diesel)

So what explains this unusual price disparity? I believe it evidence of market forces at work, and in many ways a refutation of the gouging charge.

Demand for gas responded to higher prices by being reduced, but the capacity for reduction in fuel was small, so demand for fuel remained similar to pre-Katrina levels.

Folks who consumed gas reduced their usage. They changed vacation plans, batched trips, car-pooled and used public transportation. But the trucking industry is already running pretty lean and other than not operating there was very little room for them to reduce fuel consumption. Therefore, we saw the demand side of the "supply and demand" equation come into play in a way that we could clearly see, and the contrast of effects was dramatic.

What astounds me is that this phenomenon was available for all to see on every gas station sign that offered diesel, and yet few seemed to notice. The economic illiteracy of Americans is on display.

They are large, no doubt about it. I don't believe people are looking at their gross profits at the end of the year and basing their price gouging allegations on that. What Exxon-Mobil has done is to bring in the largest haul of money during the 3rd quarter ever. Their profits dwarf three other coporate behemoths that are hardly small time operations-Coca-Cola, Time Warner, and Intel.

From Congressman Bernie Sanders on buzzflash.



Bernie Sanders guest editorial at Buzzflash


There is nothing wrong with making a profit, but when your quarterly profits skyrocket, you can hardly be taken seriously when you try and blame it on production costs, lack of refineries, etc.

With all due respect to Bernie Sanders, so what? Exxon is 15 times the size of Coca-Cola, of course they make a whole bunch more money? The economy is rocking and rolling, 4.8% annual growth rate in the last quarter, which means that all successful companies should be recording record profits. My employer certainly is.

As Bikerdad noted, Exxon-Mobil has annual revenues of more than $300 Billion. Here is the Fortune 500 for your review. You'll find Exxon-Mobil at the top of the list in terms of revenue. You'll find the other companies mentioned by Bernie Sanders as follows:
sorry i can't do tables...

rank company - revenue - - - profit (millions)
1 Exxon Mobil - 339,938.0 - 36,130.0
40 Time Warner - 43,652.0 - 2,905.0
49 Intel - - - - 38,826.0 - 8,664.0
89 Coca-Cola - - 23,104.0 - 4,872.0

As you can see, both Intel and Coca-Cola have higher profit margins than Exxon-Mobil. Also, both Coke and Exxon earn 2/3 of their revenue outside the United States (not sure about Intel / Time Warner, maybe they are closer to 50%). You'll note that British and Swedish politicians are not railing about 'record profits in the US while British and Swedish drivers suffer!'

A cynic would point out that Sanders chose companies that had nothing to do with Exxon and wrote a column in "buzzflash" to rile up people who have no knowledge of basic economics. Of course, it seems to work, so who can blame him. I don't understand why, when it comes to gas prices, our media, politicians, and a great majority of us completely lose our minds.

Once again, it's one thing if you make a profit, it's another if you are Conoco and you have increased your profit margin by 89%. If they make several billion more or less, even ten billion or so or less, no big deal. At the same time, it's obvious that they are reaping in record profits. Is Wal-Mart experiencing 50% plus growth in profits? How about Berkshire-Hathaway? If it was across the board, you'd have a point, but I have yet to see anything that suggests that this is the case.




I believe that he chose larger corporations that most everyone knows about. I'm not certain what other comparison he could've made. Perhaps he chose ones that are so profitable that even they pale in comparison? Just a thought.



I believe that the oil industry themselves have brought this upon themselves. They cite problems regarding MTBE phasing out operations, ethanol production, as well as the increase of "spot" prices of crude oil, then it's discovered that althoughs items would increae the price, they certainly wouldn't do so to such a great degree that consumers are noticing. have been debunked by studies that show otherwise.

You mean they increased profits not profit margin don’t you? The profit % is about the same. BIG difference. If any company increases their sales revenues their profits will rise accordingly. The study you referred to says nothing about this and only points out that the switch to methanol was not a major factor in the price rise in CA. So what?

As carl has pointed out above it’s the profit % that matters here. Middlemen are in the market to offer industries protection against price changes. If a company wants a guaranteed price for oil in the future that buy a “futures contract” that fixes their price for that period. The high and more volatile the price the more the middle men make. This is the working of the free market.

Also realize the “government” (state and federal) make far more “profit” on gas sales than the oil companies do and they do NOTHING. No exploration, drilling, refining, transporting, employees, or risk.

The sin here is that so many Americans get out of school without a clue as to how our economy works. This makes them easy targets for what is often partisan political nonsense.

Are we being priced gouged at the pumps?

I must be in a strange mood today, because I find myself arguing across all political ideologies in my responses on various threads.

I agree with Dingo. We don't pay enough at the pump. Every other car I see on the road is an SUV or truck. The price of fuel does not reflect the costs to society. In fact, we ought to invest the money we've set aside for an Iranian nuclear confrontation/negotiation/ standoff...and invest it in alternate fuel sources.