NationStates Jolt Archive

Here is an interesting article from the tax foundation. When you want to complain about high fuel prices it is easy to blame the oil companies. The foundations study indicates that it isnt the oil companies that profit from you. It's the US federal and state governments. The man is sticking it to you in a big way. Out of every $1 in profit earnings on Oil products $3 is made by the federal/state and local governments in taxes!

http://www.taxfoundation.org/publications/show/1168.html

Yes, they're bing dirty capitalists and need a spanking.

The oil markets and Hurricane Katrina are both conspiracies by the US government. Doesnt it seem a little odd that a hurricane making oil prices rise by such a large amount came at a time when oil prices were already high? I think it does. Stranger yet, the prices have come down at a suspiciously fast rate; (in my area its already under 2.30 per gallon). Now putting these clues together, we can safely assume that the US government made Hurricane Katrina just so when the oil rose and than lowered it would seem like a little amount of money. When in reality, it's still quite expensive, but more people would buy gas because it is seemingly cheaper.

I think in the absolute immediate aftershock of Katrina, there was probably some pretty widescale price gouging, but in the overall scheme of things, I don't think so. They wouldn't be able to get away with it for this long. In those few days after Katrina, I wouldn't be surprised if the oil companies took advantage of the chaos to jack up prices for a day or two, but not for the whole year.

The basic laws of supply and demand would say they were definatly gouging. When supply is limited, PRICES go UP but PROFITS go DOWN. How can that be? If you don't have a product to sell, how do you make money, no matter what the prices are.

Let's suppose General Motors decided to close down half of their plants. That would cause an auto shortage. Prices of autos would go up world-wide. But would General Motors make record profits? NO. They would lose money. They wouldn't have product to sell at any price. If they could make record profits by closing down half of their plants, they would do it tomorrow.

If there were really a shortage of product forcing prices up, the oil companies would be reporting record losses, even with the higher prices.

Our problem is, the since deregulation of the early '80's, nearly every industry has become a virtual monopoly. So few companies control each industry that competition has been eliminated. Only competition can stop gouging. In the late '70's there were thousands of oil companies. Now there is just a handful. This is not a problem confined to oil. Nearly every industry lives with little competition. This is causing a breakdown of normal economics.

The basic laws of supply and demand would say they were definatly gouging. When supply is limited, PRICES go UP but PROFITS go DOWN. How can that be? If you don't have a product to sell, how do you make money, no matter what the prices are.
Well, for one the demand for oil is fairly inelastic. That's one reason.