Gas prices.... Gouging?

[PanTheMan]

Has a SINGLE Oil company Exec EVER been held accoutable for Gouging?...lol.
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WASHINGTON - The U.S. Federal Trade Commission is investigating whether gasoline price profiteering has occurred and if oil companies have constrained refinery capacity to manipulate fuel prices, an agency official said Wednesday.

“A determination that unlawful conduct has occurred will result in aggressive law enforcement activity by the FTC,” John Seesel, an FTC associate general counsel, told a Senate Commerce Committee hearing.

The FTC is responding to language in recently passed energy legislation that requires the agency to probe whether gasoline prices have been manipulated by attempts to reduce refining capacity, Seesel said.


U.S. oil companies have adamantly denied that they have acted to constrain gasoline or crude oil supplies.

The FTC is keeping an eye on gasoline prices, even though they have fallen from their record $3.07 per gallon national average price seen when Hurricane Katrina hit the Gulf Coast, Seesel said.

“The commission is very conscious of the swift and severe price spikes that occurred immediately before and after Katrina made landfall,” Seesel said.

Four major oil refineries remain shut and a large chunk of oil production in the Gulf of Mexico is still offline due to damage from Hurricane Katrina which slammed into Louisiana and Mississippi three weeks ago.

And now with the approach of Hurricane Rita, which has strengthened into a Category 4 storm, oil and gas companies have evacuated thousands of their workers from oil rigs and production platforms in the Gulf. Some refineries are starting to shut down, and Houston’s mayor called for an evacuation of low-lying, flood-prone areas of his city.

Separately, the Government Accountability Office said recent retail gasoline prices have risen faster than crude oil prices.

This goes against the historical trend when major crude oil price swings are generally mirrored by gasoline prices, said Jim Wells, GAO director of natural resources and environment.

Governors urge probe
On Tuesday, eight Democratic governors asked President Bush and congressional leaders to investigate possible gasoline price gouging in the aftermath of Hurricane Katrina.

In a letter, the governors urged an investigation into “excessive profits being made by oil companies who are taking advantage of this national crisis.”

The letter was signed by the governors of Oregon, Wisconsin, Michigan, Illinois, New Mexico, Iowa, Montana and Washington. It also urged Congress to refund any excessive profits to consumers.

The letter cited a study by University of Wisconsin economist Don Nichols that found the hurricane was not entirely to blame for high gas prices.

Historically, Nichols said, the markup between the price of a gallon of crude and a gallon of gasoline is about 85 to 90 cents a gallon, including refining, distribution and taxes.

The study estimated that for pump prices to reach $3 a gallon, the price of crude oil would have to be about $95 a barrel, but crude prices have been holding around $65 a barrel, and Katrina has not caused a surge in crude oil prices.

“The disconnect between gasoline and crude oil prices is quite remarkable,” Nichols said.

Ed Murphy of the Washington-based American Petroleum Institute said refining capacity was tight before Katrina and the storm reduced it further by knocking out some refineries.

“That put upward pressure on petroleum prices,” he said. “It’s a no-brainer.”

[Morrigoon]

That's just stupid. If the local governments didn't make building refineries just a horrible, expensive mess of litigation and permits, it would have been profitable for oil companies to build more refineries before this all happened. They've dug their own hole with regulations, and now they (and sadly, all of us) must lie in it.

[PanTheMan]

The CEO of Chevron was was being interviewed here the other day. He said the Main Reason for High prices here in the Bay Area right now is from Hurricane Katrina. When the interveiwer pointed out to him, that the fully operational Chevron refinery here, gets it's tankers from Alaska and South America, (As Does Shell and Tosco) How could Katrina have any effect on the prices here?

He had No Comment and walked off.

End of September is the end of the 3rd quarter. Wait till you see the record profits. When they make Billions will it still be possible to blame "Enviromental Whack Jobs" not allowing the building on new refineries? End of the second Quarter had Chevron making 26 BILLION. They deserve maybe a few billion, and drop the prices a buck for us...

[Morrigoon]

So.... you're suggesting that they charge us a lower price for gas than they could make by selling it in the affected areas (even after accounting for transportation costs)?

There is greater demand than supply because part of the country can no longer get its gas from the usual places. That means that other places that get and refine gas will be getting additional demand for their products. Increased demand without increased supply cause increased prices until such prices cause demand to drop to a point where it meets up with supply. Lesson One, microeconomics.

[PanTheMan]

I Understand that. however Chevron doesn't Sell in LA., or Miss. I understand competitive pricing as well. But this would be like the HQ of Burger King getting blown up, so BK would have to charge $5 for a Whopper. THEN McDonalds raises the Big Mac to $5. They do it simply because they CAN. not because they are personally being effected.

Like i said, Oct. 1... 3rd quarter profits will be out. It's going to be ugly.

[Morrigoon]

But they ARE being affected, that's what you're missing. Chevron might not sell in LA or Miss, but their competitors DO. That means their competitors are shifting supply in that direction, which in turn reduces supply here. So for every gallon of gas Chevron has here in CA, there is now an increased amount of demand because there are fewer total CA gallons compared to total CA demand. THUS PRICES RISE.

It's basic economics, really.

[Prudence]

I'm curious what deals the states could have made when permitting the refineries that are in place now. The regions that contain the refineries and the pipelines bear the social and environmental burdens that accompany those entities. I imagine it must be some frustration for them to watch a larger percentage of the gas produced in their region head elsewhere, leaving lower supply and higher prices -- and the same social/environmental burdens -- in that region.

(Sometimes a region does protect its interests -- such as when earlier this year northwest senators from both parties killed the proposal to require Bonneville Power Administration to charge market rates in this area.)

[TigerLily]

I person;;y think it's gouging. The oil companie profits are in the billions. The prices were raising before katrina and I can see them going higher after rita. They go up if the power goes out. They go up in the summer and right before holidays. the prices seem to go up if the wind blows just right....

[Morrigoon]

...And we pay it.

[PanTheMan]

Those who can afford pay it. Corporations have lost sight of what is "The greater Good" for society. They now have an "If we can get , we are going to get it" greed mentality. We no longer pay what something is "Worth" but what they feel they can get.

So what happens to those who get left behind and can no longer afford?

Let them eat cake.