Halting the Gas Price Inflation: Free Enterprise Needed!

[ritehook]

There is a related thread on this topic, but a poll, and not into any possible solutions.

The most common reasons - both very legitimate - for the rising fuel prices are greater worldwide demand, and the collapse of the value of the dollar [main reason: "mission accomplished" in Iraq - thanks George!]

However, another strong reason is the virtual monopoly of the Big 5 in the US. Break this monopoly and the price of gas will drop by 30% or more.

The Big 5 used to be the Seven Sisters. But mergers have cut even tht bogus competition down to a more manageable number.

THE BIG FIVE DO NOT COMPETE IN THE DISTRIBUTION AND RETAILING OF THEIR PRODUCT!

If you've ever been up and driving around early in the morning you've seen Shell (now Shell/Texaco) pumping gas into the tanks of a Chevron station - and vice versa. And into the tanks of Tom's Independent Station.

They do this regularly.

There is competiton among these theives in the Discovery and Drilling arenas. Not in retailing and distribution.

The Big 5 own the whole shebang - from the wellhead to the gas pump.

Are you old enough to remember "gas wars?" That is when several, or a group, of gas stations in the same town or area of a big city would constantly lower prices to drive a competitor out.

The 7 Sisters took care of that problem by the 1970s. Gas Wars are as out of date as Star Wars.

Solution: As the US DoJ moved against Bell Tel to deregulate the distribution of telephone service - and thus dramatically lower prices - they can break this monopoly the same way.

Use Sherman Anti-Trust to open the marketplace.

Stop allowing Big Oil to enjoy the benefits of Socialism. We need more free enterprise in this lucrative biz.

Break the monopoly link from the wellhead to the pump and you break one of the foundations for soaring prices.

Or, to put it in a way that a much-beloved poster on this board is wont to say: STOP THE PHUCKIN' OIL COMPANIES FROM PHUCKING US OVER. WERE ALL VETERANS WHO FOUGHT FOR THIS COUNTRY AND FREEDOM, WHO THE PHUCK ARE THESE OIL BARONS TO STICK US WITH THE SHITTY STICK OF CORPORATE SOCIALISM.

[Marigold HD]

wow, that was pretty deep. Thanks.......anyways, I hear to just avoid all Shell and Esso stations. These two have all the power drive prices lower, so if we avoid them....They will be forced to decrease prices and all other companies will follow suit.

[mathdotcom]

How would you use the Sherman Antitrust act to stop this behaviour?

You've provided no evidence of anti-competitive behaviour.

[ritehook]

How would you use the Sherman Antitrust act to stop this behaviour?

You've provided no evidence of anti-competitive behaviour.

Oh sure. They collude to fix orices by controlling the distribution and retaling of their product. I've given an example of that, and I doubt that would be the only smoking gun. It's why you no longer see the "gas wars" that were common in more competitive times.

What other industry controls the production, distribution and retailking of their product?

Do the book publishers own all the Barnes & Nobles and Amazon.com?

Do Tme/Warner and the other top distribuors of music vidio and cds own the retail outlets where they are sold, including Walmart, Target etc?

Are your locald supermarkets owned by the farmers, or by agribuisness.

This industry is compettitve only in the discovery and drilling.

They are an anti-competitive, price-fixing monopoly on the retaill and distribution level. IE they are an illegal trust. IE, they do not compete on those two levels.

It's not the only reason for the rising prices, but they are producing record profits for American industry - not just the oil industry, but all industies, in the history of the nation.

They have gotten away with it because they own the people who make the laws. Their monopoly on the local levels should be broken - otherwise, it's Socialism for the Super Rich, using the power of govt to insure monopoly.

Anti-American. But wht else in new, nowadays?

[ritehook]

wow, that was pretty deep. Thanks.......anyways, I hear to just avoid all Shell and Esso stations. These two have all the power drive prices lower, so if we avoid them....They will be forced to decrease prices and all other companies will follow suit.

Shell/Texaco and Esso/Mobil are giants, but the other 3 are up there also

The problem is that the station down th street, Joe's Fast Fillup, who is charging two cents a gallon less, is almost certainly pumping gas from the Big Five.

The Golden Rule rules in the USA. Who owns the gold makes the rules. And the rest of us, and the nation at large, go into the pits.

We get the free enterprise the struggle that implies, they get the socialist free ride.

[mathdotcom]

You are just claiming they collude to fix price. You've not given any proof of that.

Vertically integrated companies are not breaking the law. Yes it causes marked power issues, but it makes sense from a cost perspective. Just because there are only a few companies operating in a given market does not imply they are breaking the law. There are plenty of monopolies that exist and are not "illegal". Demand has increased steadily for oil over the past decade while production has not substantially increased. Gas prices go up when oil prices go up. That's all you're seeing.

[Justin7]

A barrel of gas has 42 gallons. The price today of a barrel on the open market is $118 - that's $2.81 wholesale, before figuring out distribution and taxes.

I don't think that the "Big 5" are guilty of price fixing. A bigger contributor are the "Incompetent 3" - GM, Ford and Chrysler. They refuse to produce fuel-efficient cars in the US, and resist every congressional initiative on this. When I was in Germany in 1990, EVERY CAR got over 30 mpg. The "I3" can't do that on average 18 years later.

Now, GM et al aren't the sole (or even major cause) of high gas prices. I agree that US fiscal policy (including pissing money away on the Iraq war, and blowing 70% of the US federal budget on SSI and medicare) is a chief culprit in dollar devaluation, ergo higher costs. Tax breaks to oil companies are another small kick in the shin. But dumb Americans that want gas guzzlers are more to blame.

[mathdotcom]

And then on the other hand, these guys who blame corporate conspiracies for higher gas prices then go to a rally on reducing GHGs. High gas prices are good for the environment, pal!

[2Pac]

You know where gas stations make their money? They don't make that much of a profit on gas. They make their money when you fatasses go inside and buy a box of donuts and a few 2 liters.

[noyb]

you think the oli-prices are high? go to some countries in europe, where i live i pay 250% as much as you do, because of all kinds of environmental taxes. i'm not happy about it, but at least you pay a price for the pollution you produce. it really makes you think about the amount of gas you want to use, i'll think twice before i buy a car that is too big and needs to much gas. as justin was saying, perhaps the american industry as well as the consumer should do the same, instead of demanding lower oil price which is not gonna happen anyway.

[ritehook]

you think the oli-prices are high? go to some countries in europe, where i live i pay 250% as much as you do, because of all kinds of environmental taxes. i'm not happy about it, but at least you pay a price for the pollution you produce. it really makes you think about the amount of gas you want to use, i'll think twice before i buy a car that is too big and needs to much gas. as justin was saying, perhaps the american industry as well as the consumer should do the same, instead of demanding lower oil price which is not gonna happen anyway.

Check the GNP of your country with that of America.

We have this strong ecomony (pre-gwbush, anyway) because transport has always been reasonable. I kinda think, f'rinstnce, that I could drive either the length or breadth of your land in a day. Can't do that here,and East-West, evn driving in a team without stopping is multiple days.

Civilazation is transport, as Rudyard Kipling said. We've developed this high material civilization because transport - fuel prices, great superhighways (coast to coast without hitting a traffic light if you have a big enough tank), strectching to remote areas - is so cheap and highly developed.(Raspberries harvested today in California will in a few days be consumed in New Hampshire)

When we lose that, the famously high US standard of lving will plummet - as in fact it is doing now.

The one great benefit of it is that wars like the current insanity will be impossible - as old Imperial Rome and the recent Soviet Union had learned. Ditto post-Revoltionary France.

The global corporations based in America have the same attitude of Louis XIV - "Apres moi le deluge." (Fuk it, after I get mine let the shit hit the fan)

And after the misery we'll get our Caesar, or Napoleon. But the super-rich bandidos our our corporate boardrooms will by then have left the country.

And the stockholders of the oil companies - like I suppose the purveyors here of the counterpoints - will be using their stock certificates to patch the holes in their living room wall. If they still have living rooms, and not cardboard shacks, the dwelling favored by many in other plundered and destroyed lands.

[ritehook]

You know where gas stations make their money? They don't make that much of a profit on gas. They make their money when you fatasses go inside and buy a box of donuts and a few 2 liters.

Of course, I'm not talking of the peons who actually run the gas stations, or "own" them on a contract lease from an oil company.

Gas stations, btw, do no set their own prices. That is done by the Big Five, something called unit pricing per area. Yes, they pre-set the prices depending on the demand in the area, regardless of how much or litte Joe Blow who owns a struggling little station down the block from you, wants to set the price.

Joe may actually want to set his price 6 or 8 cents lower than his better located competitor, so as to sell -as you note - more chips, beer, soda and crackers. But he can't, as per his contract with the supplier.

It's monopoly, pure and simple. But the pols are on the take.
Apre moi le deluge.

[ritehook]

You are just claiming they collude to fix price. You've not given any proof of that.

I've given circumstantial proof enough.

People have been sentenced to death in America, on the basis of strong circumstantial evidence.

It you look out the window tomorrow and see the ground covered with snow, it can be assumed that it snowed during the night, even tho you personally did not see it come down.

Please let me know where a bitter "gas war" is currently going on in the USA. Like they had from the early 20th century up through about the 1960s, '70s.

There ain't any. Big Oil fixed that little problem. It's a monopoly, but one so politically potent (like Bell Tel was NOT) that it's untouchable.

Even Microsoft got hit with with Anti-trust. Because, there were other big players, billionaires just like Gates, who had counterweight to Microsoft, and so were able to move the political process.

There is no economic or political counterweight to the Big 5. They are the Great White Shark of the corporate world. They are even now scheming to make the country dependent on them, even if viable alternative energy is someday widespread.

[john pavlic]

What I love about these uneducated posts about the price of gas, is that these people who tell you there are gouging us don't say why they haven't been doing this all along for the last 20 years! They think it went like this, at a meeting 10 years ago " do you think we should gouge the country now?" " no not yet lets wait 3 more years we don't need that extra money yet" Please stop being stupid, and go to economics class. The oil companies owned by Russia, Venezuala, and the Middle East nations are much more powerful then any of the 5 over here! Most of the drive up in price is higher demand, plus no higher production, and tons of speculative traders.

[bettilimbroke999]

You are just claiming they collude to fix price. You've not given any proof of that.

I've given circumstantial proof enough.

People have been sentenced to death in America, on the basis of strong circumstantial evidence.

It you look out the window tomorrow and see the ground covered with snow, it can be assumed that it snowed during the night, even tho you personally did not see it come down.

Please let me know where a bitter "gas war" is currently going on in the USA. Like they had from the early 20th century up through about the 1960s, '70s.

There ain't any. Big Oil fixed that little problem. It's a monopoly, but one so politically potent (like Bell Tel was NOT) that it's untouchable.

Even Microsoft got hit with with Anti-trust. Because, there were other big players, billionaires just like Gates, who had counterweight to Microsoft, and so were able to move the political process.

There is no economic or political counterweight to the Big 5. They are the Great White Shark of the corporate world. They are even now scheming to make the country dependent on them, even if viable alternative energy is someday widespread.

The problem you have here is that production costs are actually lowered for vertically integrated company's. Throwing in tons of middle men desiring huge profits at all level would only add costs to the final product (why do you think company's make their own products in the first place?). Do you really think there would be hundreds of offshore discovery and drilling operations charging nothing for their service if some psychotic antitrust came in and forced these companies to disband? I mean has anything really changed in the software world following the "breakup" of Microsoft, of course not (hell Apple their number one competitor charges more than any1 for their shit). B/c Walmart has low prices you do not have a problem with them monopolizing the market and destroying competition but since you pay an extra 9 cents/gal over what Joe Bob might charge if he felt he could dominate gas sales in his area by doing so (and sell lots of hot dogs, cheese puffs, etc.) you cry oh no stop the monopoly. OPEC controls the vast majority of oil in the world and the nations formed this union souly to collude to control the price which even though we receive most of our oil from Canada and Mexico (also Venezuela which is an OPEC nation) the global marketplace price colluded/set by OPEC directly affects the price of oil in the US market (received from non OPEC members) the only real way to affect oil price would be to breakup OPEC which is the true price controller. Also another huge reason the price is up is that the dollar has slid due to the fukin recession in this country, so if you want prices to go down figure out a way to breakup OPEC and stimulate the economy to avoid the current devaluation of the dollar instead of trying to "breakup" the oil companies. Simply put if the value of a buck goes up prices will drop, value of a buck plummets prices will go through the roof there is no way to avoid that, if 20 billion today is worth 30 billion tomorrow of course the oil companies will have "record profits" in terms of dollars, the average person just doesn't realize the value the dollar's losing until it costs 3 1/2 of them instead of 2 1/2 to get a gallon of gas.

[mathdotcom]

lol ritehook, you moron

"if you see snow on the ground in the morning, you can guess it snowed during the night"

Hence, if prices go up it's because of collusion. No other possibility.

Let's let this thread die

[Dark Horse]

US oil companies are raking in record profits, while US consumers are being taken to the cleaners at the pump.

It doesn't take a rocket scientist to see what's wrong in that picture.

I remember how stunned I was when I first heard VP D*ck Cheney explain, early in 2001, that is was perfectly alright for Texas companies to charge outrageous electricity prices to Californians during a serious energy shortage. It was just the 'free market' doing what it was supposed to do. (just like Haliburton is doing what it's supposed to do in Iraq?). Took many Californians years to pay those bills. Fortunately, Enron got exactly what it deserved.

Same thing is now happening with oil, but nationwide. Corruption in high places. Remember these corporations fund our politicians.

Democracy my arse.

(invest in solar!).

[mathdotcom]

One benefit of Californians getting gouged was that it got them to vote out the morons who didn't have a clue how to deregulate electricity.

You say US consumers are being taken to the cleaners... why do you feel you are entitled to the same gas prices you've always had? There are more people (China/India) now competing for a limited supply of oil. So prices rise, even if oil production costs have not increased. That's why prices go up, and that's why oil companies are making profits. Why should they sell to you at a lower price when they can sell anywhere else for more? Why do you deserve to be subsidized? Like someone else said, the Big 5 are nothing compared to the OPEC countries and Russia.

[Dark Horse]

Not so fast. Gasoline taxes are what made gas more expensive overseas.

First explain why US oil companies are raking in record profits. Then we'll talk about 'entitled'... Do you think those profits have anything to do with us paying record prices at the pump?!

Or do you really believe that an increase demand for oil in India is the real cause?

[mathdotcom]

I never said anything about prices overseas. I talked about *demand* from overseas. It's a basic law of supply and demand... with supply constant, and demand increasing, prices will go up. You have more people competing for the same amount of oil. So if prices go up, and costs stay the same, then the producers are going to make profits.

This is entirely different than the producers getting together and agreeing to purposely restrict output in order to raise prices.

India/China are growing at astronomical rates. They didn't have much need for oil before, but now they are developing their economies. Do you know that China is growing 10,000% faster than Britain did during the industrial revolution?

[tacomax]

Gas stations, btw, do no set their own prices. That is done by the Big Five, something called unit pricing per area.

I think that the effect of OPEC restricting supply as well as demand outstripping supply issues has had significantly much more of an effect on pump prices than any anything like unit pricing per area.

[ritehook]

I never said anything about prices overseas. I talked about *demand* from overseas. It's a basic law of supply and demand... with supply constant, and demand increasing, prices will go up. You have more people competing for the same amount of oil. So if prices go up, and costs stay the same, then the producers are going to make profits.

This is entirely different than the producers getting together and agreeing to purposely restrict output in order to raise prices.

India/China are growing at astronomical rates. They didn't have much need for oil before, but now they are developing their economies. Do you know that China is growing 10,000% faster than Britain did during the industrial revolution?

As I said in my OP, I don't deny that demand elsewhere is impactful. Ditto, and probably more impactful, is the sh-tdrain of the dollar. All goes back to a certain war.

But we can do little (at this late date) re rising demand worldwide. We can do something about the dollar dump, but that would have to await the next administration,

OPEC does periodcally cut supply - but there is always some OPEC nation that cheats on those unofficial accords - it doesn't hold, there is no honor amongst thieves.

Breaking the de facto monopoly of the Big 5 in the distribution and retailing of this vital product is critical. But it won't happen.

I'm personally in favor of offshore drilling to boost our supply - but only if the drilled oil goes to domestic consumption only. As it is now, with a virtual dictature of Big Oil (they fear only one entity, with a gravity center outside the US), that cannot happen.