Now that gas is getting close to $4 a gallon again, I'll start seing things on FB and blogs that indicate that it must be the greedy oil complanies because there is no reason for gas prices to rise. Well, Scott can explain it a whole lot better than I ever could, I'll let him take over:
First, from a NatGeo article US gas Price Spike: Blame the Long Road to From Well to Pump that Scott Cites:
True, the price of crude plus taxes explains most of the price at the pump.
"It's basically simple for the most part," Goldstein explained, "but that
doesn't mean the rest is trivial. It's not." And, he notes, the "last 20 percent
is complicated.". . .
Pipelines from the Gulf Coast to the East Coast are limited, and the
only vessels permitted to move goods between U.S. ports are those built, owned,
operated, and crewed by U.S. citizens and registered under the U.S. flag....
The EIA report also points to planned and unplanned maintenance at refineries
... the changeover from winter grade products to summer grade products to meet
U.S. emissions requirements, and very low profit margins for refiners prior to
the current run-up.
Do you see the common theme? If not, just follow Scott's translation:
Let the libertarian translate: Due to EPA regulations strangling pipeline
building, Union-friendly laws strangling shipping capacity, OSHA regulations
shutting down entire refineries for months at a time, more EPA regulations
mandating specific fuels for specific regions, and refineries eating into their
profit margin to conform to even MORE EPA regulations, gas is expensive.
We have a friend that exclaimed that oil companies make more money than any other company in the world. Yeah, because they service almost every industry in the world (fuel, plastics, polymers, etc.) so the oil companies are huge in size. However, their profit is not all that high compared to a lot of Industries, including almost anything related to medical (including billing services), magazines, lumber, telco's, semiconductors, computers, Apple etc. In fact, at a profit of between 10% and 13%, their profit is most likely smaller than what the company you work for requires and is certainly smaller than what they aim for (they most likely aim for 25-30% - if they are trying to grow, or put money away for hard years anyway).
But, sure, go ahead and call the oil companies greedy if it makes you feel better.
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