Well, I can’t say that this is much of a surprise:
A) high gas prices aren’t related to supply, and therefore drilling more won’t curb high gas prices and B) re-regulating Wall Street, cracking down on oil industry consolidation, and investigating energy company collusion is the best way to get at the problem. We know this not just because of whats happening now, but because of what has happened over the last decade.
Here is an excerpt of the energy chapter from my book, Hostile Takeover that spells it all out:
In October 2004, Consumers Union… found that in the first nine months of that year, oil companies’ profits increased by a whopping 35 percent. The watchdog group found that the price increases that created those profits came more from higher charges for refining the crude oil into gasoline, than from higher prices for the raw crude itself (i.e., supply). Why would those refining charges increase? Because federal regulators have allowed the oil industry to pursue their goal of deliberately reducing refining capacity to create artificial bottlenecks that drive up the overall price of gasoline. And it has been deliberate. “If the U.S. petroleum industry doesn’t reduce its refining capacity,” said a 1995 internal Chevron memo, “It will never see any substantial increase in refinery profits.”
This is the oil/gas version of the Enron speculators shutting down power plants in order to artificially jack up prices – and it is precisely what the “drill, baby, drill!” crowd doesn’t want to talk about, because that crowd is underwritten by the same oil industry and Wall Street speculators that are making a killing off the status quo.
Obviously, there is only one possible solution for out-of-control gas prices: We must give the oil companies tax breaks to build more refineries!
Horrible as it is, I can’t escape the sneaking suspicion that that’s exactly where we’re going to end up…
September 10th, 2008 at 07:15pm Posted by EliEntry Filed under: Corruption/Cronyism,Economy,Energy,Enron,Wankers