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04-25-06, 06:34 PM #1
Oh yeeaaaaah? The gas price is under investigation and I'm pissed off!
Gas prices under investigation
By Harrison Sheppard and Josh Kleinbaum, Staff writers
SACRAMENTO — As the cost of gasoline edged past $3 a gallon, Gov. Arnold Schwarzenegger ordered state officials Monday to investigate whether oil companies are gouging California motorists at the pump.
The same day, a bill that would slap a windfall profits tax on California oil producers was approved Monday by a state Assembly committee.
The governor directed the California Energy Commission to examine whether the industry is manipulating the market and whether it is doing enough to ensure adequate supplies and refinery capacity are available to satisfy consumer demand.
"The citizens of California deserve a vigilant watchdog over this market and a full blown analysis to determine to what extent the behavior of big oil companies is driving these record-high prices," Schwarzenegger wrote in a letter ordering the probe.
Schwarzenegger refused to take a position on the windfall profits tax when asked about it during a news conference. He said the only way to cut gas prices was to reduce consumption.
The bill debated Monday would levy a 2 percent tax on oil company income of more than $10 million and use the revenue to help low-and moderate-income senior citizens pay for prescription drugs. It was approved by the Revenue and Taxation Committee, 4-3.
The bill's sponsor, Assemblyman Johan Klehs, D-San Leandro, said, "The only thing I can think of why prices are going up is pure and simple greed."
The average price of gasoline hit $3.13 cents per gallon in the Los Angeles/Long Beach area, up 62 cents in the last month, according to the Automobile Club of Southern California. The price is expected to rise through the summer, when demand is typically higher and refiners are required by state law to use a more environmentally friendly formula.
But oil industry officials said there is no price gouging, simply a convergence of factors at work to drive up the cost of gas.
Among those factors are increased worldwide demand, higher costs for crude oil, a new federal requirement for additional use of ethanol, and some Gulf-area refineries remaining offline from Hurricane Katrina.
The governor's action follows similar moves at the national level, with congressional leaders calling for an investigation by the Federal Trade Commission and the Justice Department.
But some experts on the nation's energy crisis believe that Schwarzenegger and other officials are becoming distracted by the price gouging issue.
"The real problem is that we need to develop alternatives to oil, so if they are gouging, people could just buy something else to get around," said Tom Mast, author of "Over the Barrel: A Simple Guide to the Oil Shortage."
Some Angelenos have found ways to avoid the gas crunch, either by taking mass transit or driving fuel-efficient cars. Ridership on MTA trains and buses has increased 11.4 percent during the first quarter of this year, compared with the same time period last year.
Even as gas prices continue to rise, some state lawmakers are looking at increasing state taxes on gasoline.
Assemblyman Joe Nation, D-San Rafael, has proposed a bill to increase gasoline taxes gradually up to 25 cents more per gallon to fund road improvements. The bill could generate up to $5 billion a year for the state if it passes, though recent past efforts to raise the tax have fallen flat.
Also, an initiative now circulating for signatures to be placed on the November ballot would place a tax ranging from 1.5 percent to 6 percent on oil producers in California. It would produce from $200 million to $380 million in revenue to be used for programs to reduce the use of oil and gasoline, including research into alternative fuels and technologies.I SEE NEKKED PEOPLE! AIN'T SKEERED!!!!!
04-25-06, 07:05 PM #2
I'm no fan of Senator Chuck Schumer by any stretch, but he's talking about a probe into whether or not to break up the oil companies. I have to agree. There have been so many mergers that their is no competition any longer. It's like when Rockefeller had Standard Oil.
I've always been a Republican, but their scheme to deregulate and mess with anti-trust laws have backfired on the American people.
04-25-06, 07:21 PM #3
Congress needs a probe into itself. It's easy to demonize successful corporations and demagogue on an issue to a naturally receptive audience. Nobody likes to pay higher prices for anything. But where is the accountability for the countless wasteful, mismangaged, and dysfunctional social welfare programs for which congress is responsible? Much more of the cost of a gallon of gasoline goes to the government than goes to corporate profits. Restricting domestic drilling, restricting domestic refining, and imposing inefficient mandates on gasoline blends to appease the environmentalist lobby is hand-over-fist more responsible for gasonline prices than is anything the oil companies are doing.
Alternative energies could help; I've invested in solar energy because I believe it has tremendous potential but it's just not economically viable yet. I'd much rather pay taxes to help stimulate the research and development of alternative energies so that they can profitable and set our country down the road to true energy independence, but the government least of all things seems to have the will to do it. Castro and Fox will be drilling for oil very near American shores, but God forbid we allow Americans to do the same.
04-25-06, 07:54 PM #4Originally Posted by Andrewtx
And it's the oil companies that have resticted the building of oil refineries, not the environmentalists. They'd much rather have the oil refineries than all those pipe lines.
Sorry, I'm a Republican and understand that a healthy business environment is essential to the economy, but I also have been around long enough to see price gouging when I see it.
In the early 70's, there was a "gas shortage" and there were lines at all the stations. The feds issued an order that you could only buy gas on an odd or even day, depending on the the last number on your car license. Up until then, gas had been about 50 cents a gallon. But as soon as it hit over a buck a gallon, the shortage mysteriously disappeared and gas never went below a dollar again.
The gas companies recently did a poll and found that consumers will accept up to $3 a gallon before they drastically change their driving habits. With all these profits, gas hovering around that price, you don't see a trend?
The waste by the federal government is true, but has nothing to do with this problem. The problem is that the government has allowed too many mergers and the oil companies have found it easier to work together, just like in the days before the Sherman Anti-trust act.
04-25-06, 08:34 PM #5Originally Posted by Retdetsgt
You've also been around long enough to know that politicians will pull this stunt whenever gas prices go up, people get upset, and a window for political exploitation opens.
Increasing revenue isn't the only way to increase profits. Increasing efficiency and decreasing overhead will have the same effect. Large profits aren't necessarily an indictment of anything other than competent management and leadership, which might go a long way to explaning why Lee Raymond is getting such a boggling retirement package. Is it excessive? I'd say so. But it's not my business, and especially not the government's, to decide what a public corporation pays to its executives. The profit margin on gasoline is not out of line with other enterprises, it's just easier to attack. And having a smaller number of competitors doesn't necessarily prove a lack of competition; the microprocessor industry has few but Intel and AMD and still very competitive. And having many competitors isn't necessarily desirable. The airline industry has plenty of competitors and plenty in or on the verge of bankruptcy.
Have you seen the cost of a first class ticket on a domestic flight? Outrageous! Or the disparity between how much a ticket costs when you purchase it months in advance instead of the day before? Infuriating! If only the airlines were profitable, then the politicians could tear them down for their gouging of first class and eleventh hour tickets. Then again, maybe it's best that the airline woes continue. That way I don't have to listen to Chuck Schumer's dishonest rants in front of Dulles.
04-25-06, 11:38 PM #6Originally Posted by Andrewtx
Shit like this is the exact reason the Sherman Anti-trust laws were passed at the turn of the last century. Only then it was the railroad and steel industry that was gouging Americans. Railroad barons were controlling the economy and had more power than the POTUS. That's why T. Roosevelt went after them. The same thing is now happening with the oil companies. They control the economy in that everything we buy is connected to the price of oil. Our entire goods distribution relies on the trucking industry, with tiny exceptions.
And do you think the price of an airline ticket might be affiliated with the price of oil? By the way, airline tickets and long distance phone calls are the only two things that are much cheaper in today's dollars than they were in 1950.
As far as Intel and AMD, they are obviously not in bed with each other. I suspect if they were, that would be apparent.
I'm no fan of government interference either, but they are there to protect the public against quasi monopolies like big oil has become. As I said, it's not just the price of gas we put in our cars, it affects the costs of everything else in our lives. If they are so irresponsible to take advantage, they're asking for government regulation.
Last edited by Retdetsgt; 04-25-06 at 11:42 PM.
04-26-06, 02:27 AM #7
Big oil is not the problem. They only make 3-5 cents per gallon. They only control about 20% of the world's oil. They do not set the prices.
Lack of refineries due to environmental regulations are the reason why prices are sky high. We make 18 different types of gas in this country. Some are for different times of the year, some are for different parts of the country. Hell, in California, we have our own "special" blend. What does that mean? It means that we cannot get gas from other parts of the country because it is not mixed "properly".
You want lower gas prices? Either ease up on the environmental regulations or invest in alternative forms of energy.
04-26-06, 09:51 AM #8
If you account for inflation, gas prices are not much worse than they were the 1960's - Plus our cars are more efficient unless you purposely go out & buy a gas hog SUV or huge honking truck for commuting purposes (people who do that have only themselves to blame, in my opinion).
The gas prices need to be this high to encourage more exploration, and more alternative energy research (there definitely should be 10x more nuclear electric plants, fusion being the ultimate, if the Federal Government will ever get off their rear ends and pump more research dollars into a Manhattan-style project - once you have cheap abundant electricity, anything's possible).
Last edited by TXCharlie; 04-26-06 at 10:12 AM.
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04-26-06, 12:48 PM #9Originally Posted by nick23smith
I do agree that we should have been looking at alternative forms of energy a long time ago. That was one of the very few things that Carter did I liked, energy conservation. But it was sacked by Reagan and subsequent presidents.
I suspect big oil could very well be behind that being not carried forward. That would have cut into their profits quite a bit. They're wringing their hands all the way to the bank.
Last edited by Retdetsgt; 04-26-06 at 12:51 PM.
04-26-06, 02:03 PM #10
Source: Department of Energy, Energy Information Administration
Looks like there's a lot more at work than Big Oil.
04-26-06, 03:24 PM #11Originally Posted by Andrewtx
Do your really believe that big business is out to do what's right for the American people and stay within the boundaries of a free market? Look at Enron. Former employees have testified that they themselves were involved in manipulating power shortages on the west coast in order to jack up the price of electricity. California was suffering from rolling blackouts as a direct result of crooked business leaders. And I'm not even talking about how they bilked investors.
You think the oil company executives are above gouging the people? They are somehow more moral than Lay and associates?
A few years ago, I lost 5 grand from stock in Network Associates, who makes McAfee. The head execs were convicted of cooking the books to artificially raise the price of the stock so they could dump it. The stock lost 50% of it's value in three days. Yeah, let's hear it for the honesty of American companies!
I'm all for free market competition, but there is none any longer in the oil business. You can talk about costs all day long of supplying oil, but you continue to ignore the record profits the companies are making at a time when the average American is getting hit hard at the pump.
Last edited by Retdetsgt; 04-26-06 at 03:26 PM.
04-26-06, 05:21 PM #12
ConocoPhillips profit soars as oil prices surge
Wednesday April 26, 1:11 PM EDT
By Deepa Babington
NEW YORK (Reuters) - ConocoPhillips (COP), the No. 3 U.S. oil company, on Wednesday reported quarterly profit surged 13 percent, as oil prices continued their march upward.
Oil companies are enjoying a profit bonanza as crude oil prices continue surging to new highs, driven by fears of supply disruptions in Iran and Nigeria, coupled with growing demand in Asia.
ConocoPhillips, which recently acquired natural gas producer Burlington Resources to bulk up its portfolio of assets, also forecast $18 billion in capital spending this year.
Net income in the first quarter surged to $3.29 billion, or $2.34 a share, compared with a profit of $2.91 billion, or $2.05 a share, in the year earlier period.
Analysts on average expected a profit of $2.35 a share, according to Reuters Estimates.
Revenues surged to $47.9 billion, up from $38.9 billion a year earlier.
Oil and gas production, including Canadian Syncrude and excluding its Lukoil investment, averaged 1.61 million barrels of oil equivalent per day, compared with 1.60 million barrels per day a year earlier.
The results were largely in line with Wall Street expectations, apart from a few variations with forecasts.
"U.S. production volumes were better than expected, international was below expectations," Credit Suisse analysts said in a research note.
The company's capital spending budget for the year includes loans to affiliates of $1 billion and the investment needed to boost its ownership in Russian oil giant Lukoil to 20 percent.
Earlier in the day, smaller U.S. oil producer and refiner Amerada Hess Corp. (AHC) also produced a glowing report, with quarterly profit more than tripling on the back of strong oil prices.
Profits at its key exploration and production unit were up nearly threefold, but its marketing and refining earnings fell, hurt by an unscheduled shutdown and maintenance of a unit at its Hovensa, St. Croix, refinery that lasted about 20 days.
"Amerada remains a cheap stock on current assets with reasonable volume growth expectations," Credit Suisse said in a research note. "This year, it needs to deliver an exploration success to steady investor nerves and convince the market that the strategy can be executed."
Amerada shares were down $2.08, or 1.39 percent, at $147.89 in afternoon trading on the New York Stock Exchange, while ConocoPhillips shares were up 61 cents, or less than 1 percent, at $68.86.
04-26-06, 05:28 PM #13
The fact of the matter is, the single greatest contributor to the retail price of gasoline is the crude oil market. Even if the oil corporations abdicated their responsibility to their shareholders and forewent the entire share of their profit on a retail gallon of gasoline, the price of gasoline would still be high. Do the Americans who own ExxonMobile or other oil stocks in their 401Ks deserve to have their retirement hit in the interest of public service? No. That's not the job of a shareholder and it's not the job of a corporation. They exist for profit and if there is wrongdoing than accusations of it should be done on the basis of evidence, not on the basis of anger.
However impressive the profits of any oil corporation in a given quarter, you'll have to at least double it to reflect the money that the state and federal governments received over the same period of time for the sale of the same product. I'll direct my outrage first to them, as they, unlike the oil corporations, are actually charged with acting in the public interest and do a dismally poor job.
Success is not an indictment.
04-26-06, 05:51 PM #14Originally Posted by Andrewtx
Why direct outrage at the government for collecting taxes? What do they have to do with it? You continue to distract from the point by blasting the way government spends money. And to say oil companies are acting in the public interest is laughable, looking at the insane profits they're making.
Success when it comes as a quasi monopoly controlling unreasonable gas prices should be an indictment. Just as Enron and it's manipulating power shortages. I bet you thought Ken Lay was a great American patriot! Success under fair market competition is certainly laudable. But this ain't how the oil companies got their money.
Break up the oil companies and if they can make the same profits, more power to them, but I'd be willing to bet that under the fair competition they had prior to the mergers, they wouldn't. I still say break them up and start enforcing the anti-trust laws that have been on the books for a century. AT&T was broken up and the price of phone service went down and the technology got better. Give the oil companies that same opportunity again.
Microsoft makes a lot of money too, but it's because they continually develop new products and improve on their old. If they don't, then they will lose to up and comers.There is always someone trying to make a better browser, operating system, etc. And the government is constantly on their ass. Gas companies do nothing inovative except raise prices and get tax breaks.
Last edited by Retdetsgt; 04-26-06 at 06:07 PM.
04-26-06, 06:07 PM #15Originally Posted by Retdetsgt
I'm not outraged at the goverment for collecting taxes. I'm outraged at the government for ignoring its constitutional mandates and being completely ineffectual almost across the board. I didn't say that oil companies are acting in the public interest. I said that unlike the government, it's not their job to.
The entire premise of your argument that there is obvious price gouging is record profit. And that just doesn't stand. As I said and as investigations have affirmed, the percentage of a retail gallon of gasoline that is retained as profit by oil corporations -- even if completely removed -- would still leave gasoline prices high.
There has certainly been concentration and vertical integration in the oil market, and in some parts of the country there are oligopolies in the retail market. Produce the evidence of price gouging.
04-26-06, 07:40 PM #16
The Government does nothing but throw up roadblocks to progress. Exxon/Mobile, ConocoPhillips, BP and all the rest do the "heavy lifting". They deserve the profits, because government has done nothing for energy policy but argue over where NOT to drill for decades.
The government also continues to issue senseless mandates to require dangerous and counter-productive chemicals such as MTBE and the boondoggle Ethanol be added to our gas, yet the oil companies have been developing amazing new drilling, refining and exploration technology which as kept us supplied with plenty of petro products for decades (Ethanol is only cost-effective because it's taxpayer subsidized, it's environmentally unsound, and causes up to a 10% reduction in gas mileage and power by many reports).
The only real gas shortage we've had in my lifetime was caused by Jimmy Carter jacking around with the natural law of Supply & Demand with his price controls - And now they're talking about doing that again.
It's really the Shareholders making most of the profits anyway - The profits eventually wind up getting rolled back into the economy via spending on company operations and research, or into people's 401(k)'s via Mutual Funds, Retirement Funds, etc, and even charities who invest in those companies benefit from the high profits - The money doesn't just disappear down a black hole never to be seen again.
I think we should be MUCH more concerned about hostile countries like Iran benefiting from the huge windfall of high oil prices - They can afford to buy a lot of weapons to kill us and our cities with, and probably will continue to do so, while the United States starves its Military at the same time we are expecting more & more from it.
I think if we went to war with any country much stronger than Iraq (such as Iran, China, etc), we'd loose unless we pulled out the nukes - And yet we're continuing to pour trillions of dollars into those countries. The only way to stop that bleed-out is to drill more domestically, develop nuclear power to its full potential, and support our domestic industries, which we're NOT doing
It doesn't help to cast every domestic industry that makes a huge profit as evil. We're doing the same thing to the Healthcare industry, and may wind up destroying it in the process as well.
Last edited by TXCharlie; 04-26-06 at 08:28 PM.
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04-28-06, 09:07 AM #17Originally Posted by Retdetsgt
04-28-06, 10:46 AM #18FishTail Guest
I don't want to limit company profits but I don't believe a company should be able to virtually dictate policy to the government. When you have big corporations pouring money into slush funds for politicians the whole thing stinks.
04-28-06, 10:48 AM #19Originally Posted by LongTail
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04-28-06, 11:11 AM #20
I know I'd be screwed if the electric prices did the same thing the gas prices have done. In the last 7 years, gas prices have more than doubled. June of 99, I paid $1.15 a gallon and was pissed that it was that high. A week later I was paying $1.25 and was incensed. Today I find myself looking back and wishing it were that low again. Hell, a few months ago I was happy that it had dropped below $2 a gallon. I have a hard time seeing where the technology or production costs have risen that much in the same timespan. The oil companies weren't exactly hurting for profit seven years ago, and now they're just taking advantage of a population that, due to the sheer size of the country and the distances that people and goods must be shipped, is dependant on their product. The United States doesn't have a centralized economy. Hell, most states are bigger than a LOT of european countries. A 50 mile one way commute isn't uncommon at all, and anything under 20 miles is typically considered right next door. Unless you live and work in the same city, public transportation is virtually useless, and if you live in a smaller city, it may not be available at all. We're stuck guys, and right now what we're stuck on is making rich guys even richer, and crippling those of us who actually work for a living.\\` ` ` ` < ` )___/\
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