seems alot of people are worried about price gouging from the oil companies, but has anyone ever considered the national average tax on a gallon of gas is .46 cents a gallon. Now I would say whether rep or dem that this is price gouging.
Listen you guys, anyone that thinks that the margin of error has a 20% fluctuation thats normal ought to go back to school if the drillers and delivers are doing everything they can to bring it to market at a decent price that America can run on. With the biggest profits ever made by the oil companies compared to the available resources they say are available someones printing money or the whole things a scam and theres plenty of fuel. I lived in texas and i worked with an electrician who designed the first wrench that the astronauts on the very first space shuttle mission was on that opened thier door when they exited it and came back in. He said he knows for a fact that the United States government burns off huge depositis of natural gas in such vast quanities thatif a freighter sailed through it it would set off massive explosions and thats why the us. coast guard has a constant watch on the natural production of natural gas and its thier job to burn it off to make it safe so theres no danger when ships sail through it. Think about this, how much natural gas on the surface of the ocean would it take with the variables of wind, current and such to make a density solid enough that a freighter could sail through it and the exhaust from the freighter would set it off. Thats a huge and dense concentration of natural gas in one spot to be able to do that. With this vast deposit of concentration how much does a person think is available to us. The world isn’t raining oil but when everythings considered theres alot of it left. Also take this into consideration, if the crunch was on to conserve with all the hype on suv’s and conservation anyone that has any stake in oil profits is going to say that oil and oil products are in short supply to drive the pices up and to make it look like oil should be conserved. Hey i’ve got the last 3 pounds of gold on earth and its for sale, its only 3 million an ounce. Oil is a comadity like furs. One year they advertise that fox is in fashion and muskrat and coon isn’t so they buy the lesser furs for less. Then three years down the road fox isn’t in fashion and they buy fox for cheap while they sell muskrat and coon that they’ve had in freezers for the maximum, which they bought for cheap 2 years befor that and make maximum profits when they sold. This whole oil perspective isn’t a month by month or year by year business program, its a decade by decade sales pitch that was designed years ago to drive oil prices up and its working. Think about it,,, i’ve got the last 10 walnut trees on earth that most know about and thier forsale, how much do you think thier worth now but theres loads of them on my back 40. To me salts in short supply, why because i said so.
Actually, the basic economic principle doesn’t apply to gasoline, as it is an inelastic good. That means that because there are no current alternatives or subsitutes, people will continue to buy gas, no matter what the producers set the price at. 
I guess I’ve been paying too much attention in Economics lately. 
Tony
Actually, the laws of supply and demand hold true for inelastic goods also. Unlike elastic goods, for example beef steak, when the price gets too high, the consumer will substitute lower priced cuts like hambrger for steak. This reduces the demand for steak and the price drops. Inelastic goods like gas, cigarettes and booze, the comsumer will pay whatever price the market (i.e. supply/demand) determines the price to be! Thus the demand remains high, with a constricted supply, the price also remains high!
There is a substitue for gas guzzling vehicles though. It is the horse, everyone I have owned or been around has had pleny of gas, delivered at any time of the day or night. The best part, it and the delivery, is essentially free! Now if everyone bought a hay burner and junked the family auto, I feel the confident the price of gas would go down, the price of hay on the other hand……. 
Capitalism, ya’ gotta’ love it! 
Economics 102 and beyond.
I rode with a bankrupt airline recently,I suppose I should have felt guilty and paid them extra.
This is an interesting read for lunchtime.
I don’t buy the supply and demand BS from the oil companies. In the aftermath of the hurrincanes, U.S. oil tankers were LEAVING the east coast to deliver oil to other nations. That’s sure to decrease supply, isn’t it. (This was noted in their testimony last night on CSPAN. There was a little stuttering by one of the CEOs at this point).
I’m all for big business making a buck. I understand economics and capitalism and I agree that it is generally in our country’s best interest to let the market decide. However, I also believe that there is a business ethic that exist (or should), especially when the national interest is concerned. Oil is a resource that comes from the earth, and therefore belongs to all of us (just like the fish in a lake). Therefore the resource should be regulated in a way that protects the citizens from excess hardship. I can’t see how simple supply and demand ideology can work in this case. My mind is open and I’m willing to listen. I watched the hearings on CSPAN last night and I am not at all convinced.
I’m generally against over-regulation by big government but in the case of oil, given that it is SO critical to our country’s welfare, I think some government intervention may be needed.
My only real contention is that profit is not evil.Our government taxes it and pays for an ever increasing number of things such as hurricane relief.The oil co.’s could use some of this for repairs or more domestic drilling{if it’s allowed}or a new refinery farther away from the coast.I’ve also heard their pensions plans are not properly funded,so maybe some towards that.
Since purchasing of gas is like the stock market or even grain markets, and purchasing is all done on “futures”……..
What does the government do, if a company that supplies us gas buys at the “wrong price”?
During the high prices, some oil companies had to sell @ $3.00 a gallon just to break even, because they bought wrong. This in-turn gave the other 90% of the oil companies the ability to make massive profits.
The government forces the oil companies all to keep the same price on a gallon of gas, right????
So, what is the answer? Government subsides for the company who buys “wrong”???
Or, do we let them go BK, like Northwest Airlines, and then bail them out with millions of tax dollars?
Northwest Airlines has filed BK, but they are still operating. Where are they getting the funds to operate if they are BK????
There is alot of federal funding to the airlines. Is that what you want to see to the oil companies???
I agree that government intervention usually backfires.I heard one of the execs. remind them that it is a world economy.When China is going through an industrial revolution like our country did 80 years back everything they do affects us all.As for under oath,how would anyone like to face down that room full of lawyers,with questions like how often have you committed this crime?
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Oil is a resource that comes from the earth, and therefore belongs to all of us (just like the fish in a lake). /quote]
There may be some Saudis and other oil producing countries that would disagree. Any irrational Democrat will freely tell you that oil is the reason we went to war with Iraq. Even ‘our’ cod fish market their oil*, albeit reluctantly, for a profit! Talk about a sacrifice for the common good. I am not sure how much tax the Government puts on it.
* That would be cod liver oil, of courseWith a 50-60 cent a gallon tax on gasoline, levied by the government (which is more than the oil companies make in profit per gallon), who is the brutal taskmaster here?
Will the real
Simon Legree please stand up, raise your right hands,
EyeJacker, Don’t make me come up there and woop ya! 
Hey, BrianK tells me just about everyday that I am a terrible businessman (well, I already knew that) as he explains to me “why nice guys finish last”. I forgot, he’s got a woopin’ coming too!
I guess my main point is this: don’t lie to me, especially in a congressional hearing. If it’s about profits, then say it’s about profits. But don’t tell me it’s about supply as one of your oil tankers is pulling up anchor to head off to some other country not named USA. Shouldn’t they make sure they take care of our homeland first? I believe the oil companies should make profits. And I have no problem with them making huge profits. But I don’t think they should take advantage of the terrible misfortune of their fellow countrymen. And I think they did! I may be wrong about that, but from what I heard in that congressional hearing and from what I’ve read about this, they did. And no, I am not saying that the oil companies or George Bush, Karl Rove, or even Donald Rumsfeld created the hurricanes, but it sure looks like they decided it was okay to profit off of it. I don’t think that’s okay. I think there is a place for ethics in the business world.
I do have a sincere question for you guys that are more educated in the economics arena. In most areas of my life, I have a choice about where to buy. For example, if Gander Mountain has great service and a good price on fishing gear I can go there rather than Cabelas, for example. But when I go to fill up my tank I can drive all around town and the prices are basically the same no matter what Oil Co. I choose. Can someone explain to me in plain language why that is? I know I’m showing my ignorance here but I’ve been doing that for years so why stop now.
I hear you Wade, but lying to Congress, if indeed they were, is a pretty harsh call! Besides who ever said Congress had a monoply on prevaricating? They certainly have no problem in lying to us. I guess that is the lawyer in them, which the vast majority are, or as I like to call them, in my southern drawl, Liars! My take on this hearing is it is merely political posturing. Elections are always their primary concern and also they could reduce their tax on gasoline, if only temporarily! After all they (certainly more so than any Corp.Exec. was ever chartered to be) are supposed to be “Of the People, For the People etc., etc.,etc.” As far as that ship in the gulf sailing away is concerned, if it were off loaded, did it not have to still be refined? Refining capacity was a supply limiting factor even before Katrina. I certainly do not know all the circumstances regarding the ship’s departure, however, even if it was greed driven, that one tanker, I do not believe, would not have had much influence on the price of oil! 
Maybe, just maybe, the captain of the tanker became disoriented and unintentionaly wandered away because you had not provided him with the latest in GPS/sonar technology like you for did me! 
Possible?
I would add one more comment Wade, and that is that I find congressional hearings to be analogous to the mating of elephants, it takes place at a high level, it is accompanied by a lot of trumpeting and it takes two years to bear fruit!
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Maybe, just maybe, the captain of the tanker became disoriented and unintentionaly wandered away because you had not provided him with the latest in GPS/sonar technology like you for did me! Possible?
Now that it a possiblity I hadn’t thought of.
Don’t get me started on the politicians. I’m not pleased with most of them either. Lord knows one can’t get elected in this country unless he’s in the pocket of somebody or has his own super-sized bankroll, democrat or republican. Getting into office takes a lot more than kissing babies, if you know what I mean.
I’m not the smartest guy in the world, but I do have a pretty good nose, and something sure stinks in big oil right about now. Here are the most important “facts” (as I have them in my head anyway). 1. We have terrible disaster – the hurricane. 2. Gas prices jump big time. 3. The oil execs. claim it’s “supply and demand” and “world markets”, noting that the refining capability is reduced. 4. Meanwhile, they produce Record Profits .
I just have a hard time believing that they had to raise prices that high in order to “protect us” from ourselves. I doubt that the higher prices stopped folks from buying gas. More likely, it just took a larger chunk of the family budget during that time because people still have to gas up the rig to go to work. Clearly, they increased profits greatly due to a terrible disaster in our country.
I don’t know. Maybe I’m wrong here but it just doesn’t seem right to me.
I’ll tell you what Mr. EyeJacker, even if I have the last Lowrance unit on the planet, I’ll make sure that YOU still get a fair and ethical price. 
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I’ll make sure that YOU still get a fair and ethical price.
Wade? What page are you on in the book that I sent you…”Why nice guys fail in business and 
succeed”?
Are you past the “forward” yet?
Quote:Clearly, they increased profits greatly due to a terrible disaster in our country.Quote! It is not that evident to me. The true victims of the hurricane lost their cars and homes and were not driving anywhere. Their demand for gas was near nil. The rest of the nation did not, other than grumble, change their driving pattern either for necessity or pleasure.
The Corp Exec.s charter is to make profits and their ultimate allegience is to the shareholders. Profits drive the company stock prices and the economy. Sounds a bit callous, I admit, but the system has worked well for years!
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The Corp Exec.s charter is to make profits and their ultimate allegience is to the shareholders.
Wade? They’ve finish thier book already….
Just My Two Cents
Lets see here now….in Wi. service stations have to charge 9.1% above there cost state law. So every service station in Wi. made record profits.
Lets do a little math. Oil companys profit margin is about 9%. At $1.50 a gallon gas that is 13.5 cents a gallon the oil company or service station makes. Say prices jump to $3.00 gallon at 9% percent mandatory or profit margin that totals comes to .27 cents a gallon profit. So all of a sudden oil companys and service stations are gouging and showing record profits????????? Yea duh…. the headlines never mention that the profit margins have not changed but due to the price increase there actual dollars in profit have gone up . NOT THERE MARGINS.
Here in Wi. the republicns wanted to lower the state gas tax temporarely, and our sweet dem governor said no. It is pretty rediculous in my book to blame private companies and expect them to cough up more money when the gov`t sell h-ll no. Lets look at the price and waste of gov`t if one really wants to talk about price gougeing……………………..
An analysis with facts! 
Very refreshing, yes indeed!
Great explaination! Maybe this makes it easier to understand.
Widget “A” cost $1.00 this week. Company selling Widget adds 15% (Margin) to it’s cost. The result is a profit of $.15 per dollar sold.
Demand for Widget “A” soars due to popularity or market forces. All of a sudden, the price for said widget is $3.00. You tack on the same 15% margin, and you profit is now $.45 for every widget sold.
In my pea sized brain, the “Big Oil” folks would be guilty of gouging if it is proven that their “Margin” jumped disproportionally with the cost of goods sold.
Of course record profits will be seen in this type of scenario. That said, you see why “Big Oil” is not whining about barrel prices? They keep their margins the same, but you pass everything along, and tack on the margin to the inflated number, and you have lots of $$$!
Now stop your whining, and invest in big oil!
Tuck
Yet another lucid explanation! 
Great illustration Tuck! 
Tuck, I’d buy your explanation but for the fact that the crude oil prices did not jump. I don’t have the info accessible right now but there is a nice illustration that graphs the price increases during the period in question.
Mr. EyeJacker, I don’t think we disagree on this all that much. It IS all about increasing profits. I still say they profited off the misfortune of others while they claim they did not. And, I suppose they have a legal right to do so. It doesn’t make it right.
I’d rather they just say “it’s about profit, period. We had you bent over and we figured we’d stick ya while you were down. Good for us. Good for our shareholders”. But when I get bent over I’d at least like a dozen roses and a box of chocolates sent my way. I’ve been checking the mail everyday and not so much as a Hershey Kiss.
I see the argument that this is capitalism and this is how it works and it will all result in a stronger, more healthy US economy in the end. So, they have the right, but is it right. I don’t know.
I do appreciate the fact that we can have a reasonable debate on here without people getting into personal attacks and getting all bent out of shape. There’s not a classier group than the gang at IDA!
Quote”I still say they profited off the misfortune of others while they claim they did not. And, I suppose they have a legal right to do so. It doesn’t make it right.”
Quote:”So, they have the right, but is it right. I don’t know.” Quote
These two statements seem somewhat ambivalent to me.
Wade, your whole argument is based on the assertion the oil men intentionally took advantage of the Katrina victims.
Please explain to me how the real victims, who lost everything including their house and auto, consequently had little or no need to purchase gas during this time were taken advantage of. The correlation escapes me, help me connect the dots. Also, let me offer up this senario; higher profits mean higher taxes which translate into more Government services available for such emergencies!
Reasonable debate among reasonable people.
Quote:”But when I get bent over I’d at least like a dozen roses and a box of chocolates sent my way. I’ve been checking the mail everyday and not so much as a Hershey Kiss.” Quote
Normally the chocolates and/or roses are sent first, therefore, I suspect you may be more bent out of shape than bent over!
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Wade, your whole argument is based on the assertion the oil men intentionally took advantage of the Katrina victims.
Please explain to me how the real victims, who lost everything including their house and auto, consequently had little or no need to purchase gas during this time were taken advantage of. The correlation escapes me, help me connect the dots. Also, let me offer up this senario; higher profits mean higher taxes which translate into more Government services available for such emergencies!
Doug, Not that they directly took advantage of the victims but rather they took advantage of the situation. They said they increased prices for market issues related to supply and demand, and it seems a lot of folks here agree. But I don’t believe that to be the case. I think they saw an opportunity to rake more cash and they jumped on it. I personally think that’s pretty low. It’s not about capitalism as much as it is about ethics. I know they still teach ethics in business school these days, but I rarely see ethical business practices, especially in the larger corporations. It is a little frustrating.
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Normally the chocolates and/or roses are sent first, therefore, I suspect you may be more bent out of shape than bent over!
I’m even worse at romance than I am at economics. Just ask my wife!
Wade, I can sense your palpitating heart. The world is a highly competative market and if you do not successfuly compete your destiny is most certainly failure! Survival of the fittest (not necessarily my assertion in the emergence of modern man), but an absolute in business. Businesses, most always have cycles, and like the squirrel, they neeed to prepare for the lean times. The oil industry has them also. Business needs to successfully compete or it will fail and that is a given! Reasonable profits are a relative judgement! What is reasonable? I submit, the determination thereof does not lend itself to subjective judgement. But in reality, what is reasonable is determined individually in precisely that manner, unfortunately! Half full or half empty? One day the the oil industry will go the way of the dinosaur and that can be as soon as Putz successfully converts Luety to gas! He is already nearly there, his remaining challenge is to mass produce it! I must admit, I am somewhat sceptical of his “eating more, more often” solution!
Prices for plywood skyrocketed here when the hurricanes hit down there. Would that not be gouging, or at least taking advantage of the situation? Same with sheet rock. Probably a lot of other building supplies that I am not aware of. Insurance rates will climb due to the storms as well. Is that gouging? I guess it is all in the eye of the beholder.
Would it be better if the government stepped in and told any of you that you HAD to sell your product for “X” amount, and your profit is “Y”?
Iraq tried it.
Points taken guys. I’m just stubborn I guess.
So after all of this debate I am left with one course of action. I WILL go out and invest all I have in the up-and-coming Lutefisk markets! 
Wade, in conclusion, I would highly recommend that one never forget to dance with the one that brung ya’!
It is way past my bed time, time to sign off.
Quote:”EyeJacker, Don’t make me come up there and woop ya!”
EJ, could this be the kind of threat you envisioned when you convinced me to persue a concealed carry permit?
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So after all of this debate I am left with one course of action. I WILL go out and invest all I have in the up-and-coming Lutefisk markets!
Ish-Ish 
I’d rather eat a bass.
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