Josh Moon – Montgomery Advertiser, May 5, 2011
After last week’s tornado devastation all across the state, Attorney General Luther Strange released a statement cautioning people to beware of price gouging.
Apparently, there’s no end to the lengths some will go in order to make an extra buck or two. Jacking up prices for necessities in a time when people are hurting has become an all-too-common practice.
But since the AG’s office is apparently willing to go after some of these offenders, let me offer a tip: Check every brand of gas station in the state. They’ll have big signs out front prominently displaying their gouging prices. And if that isn’t enough proof, check their earnings.
Last week, the world’s biggest oil companies released their first-quarter profits . Even Donald Trump blushed a bit.
ExxonMobil rolled in $10.7 billion in pure profit.
Chevron hammered out $6.2 billion.
BP, despite a massive oil spill and costly cleanup, raked in $5.4 billion in profits.
Now, I know that some of you must be thinking that this whole ordeal is simply a result of supply and demand economics. Unrest in the Middle East, where citizens are rioting for democracy and there is general chaos daily, must be playing havoc with oil production. There must be dramatically less oil being shipped out and less refined gas available for sale, right?
Not so much.
As of yet, all of the demonstrating and fighting hasn’t really affected oil production. It’s merely created an opportunity for “speculators” to speculate that the production could, at some point and time, be disrupted and result in a decrease in supply. It’s a guess.
The same guess they’ve made after every hurricane prediction the last five years.
And in response to every military action.
And at the change of each season.
And well, pretty much any time they can.
So, that nearly $4-per-gallon price — you’re paying that because some guys are guessing that it might be worth that some day. Not because it’s worth that now.
Because we still have as much oil — even as much refined gas — as before prices nearly doubled. Oil is still flowing. It still costs roughly $30 per barrel to produce.
That’s right — $30 to produce that barrel of oil that’s now selling for around $110.
And since the guys doing the producing are also the guys doing the refining and the selling of gas, guess who profits?
The big question in all of this is whether or not the speculators and oil companies are working hand in hand, fraudulently driving up prices and gouging the country. There is increasing concern that that is the case, and last week President Barack Obama ordered the U.S. attorney general to investigate the possible fraud.
I can only assume that the investigation will begin with our Congress. Maybe that’s where the fraud starts.
While oil companies are raking in record profits, they’re also paying very little in taxes and receiving huge government subsidies.
ExxonMobil pulled in more than $30 billion in profits in 2010, yet because of subsidies and loopholes, it received a $156 million tax rebate. Chevron, in the meantime, hauled in $19 billion in profits and got a $19 million rebate.
Now, this could be because the oil companies have hired the best and brightest attorneys and accountants and they’ve combined to figure out innovative ways to use the confusing tax code to their advantage.
Or it could have something to do with the fact that those two companies spent more than $25 million last year on lobbyists and political contributions. All combined, big oil spent $63 million lobbying Congress and donated more than $2 million directly to political campaigns ($1.7 million to Republicans and a bit more than $300,000 to Democrats).
So, we have a group of people interested in the passage of certain legislation or the squashing of regulations, and those people are spreading money around Washington like an athlete in a strip club in order to get members of Congress to vote their way.
Funny, weren’t 11 people in this state recently arrested for doing the exact same thing with bingo legislation?
Honestly, I have no idea where the line is anymore between outright payoff and simple contribution. But I’m pretty sure it’s being crossed on a regular basis. And I definitely know the result.
We’re getting gouged.
Josh Moon’s “Just Saying” appears Sundays and Thursdays in the Montgomery Advertiser.