Fuel Prices

OK, so let me get this straight. The oil industry is making "record" profits we're told in a remarkably insulting tone, but no one in the media, and no one in government, is explaining anything economically meaningful or relevant about profits ... like their context.

They tell you what the dollar amount of these record profits is to make you gasp. "Oh my God", you think. "No one should make profits that high and get away with charging high gas prices at the pump. Average Joe can't afford it and these guys are getting obscenely rich off average Joe." It's a terrible thing, we can't let it happen. Lets ridicule the mean nasty oil companies into reducing their prices. Yeah, that'll work. Right. All of the uninformed Americans are going to dictate management policy to some of the largest, most successful, and most regulated business enterprises in human history? What does the media think?

But do those in media and government who should ever tell us, what those obscene "record profits" mean as a percentage of sales revenues? Or as a percentage of operating costs. Do they ever tell you what the total operating costs or sales revenues are for these extremely efficient and successful companies? Much less, how these percentages compare to other major industries with similarly complicated infrastructure? No, they never do, and it's obvious why. If they did, the issue would go away and their folly would be exposed.

No one in the media or government is explaining the economic and market factors that govern retail gasoline prices, and who the various parties are that control those factors. Or which of those factors can be controlled. It's not the oil companies. Nor does anyone ever tell you what the oil companies have done with their profits. Why? Because if they did, you'd be satisfied that oil companies are doing exactly what they must to assure the future success of their companies, their duties to their shareholders, and the efficient delivery of fuel to their customers.

Finally, does anyone in the media or government ever compare the percentage of every dollar you spend at the pump going to the oil companies' profits to the percentage of that dollar going to government coffers? No! It goes without saying. Who's making the "windfall" here? The taxing authorities are making the most, yet they do nothing to bring a gallon of that fuel to the delivery point, except to encumber the process every step of the way. And for these guys on Capitol Hill to express indignation at the oil companies? When did we become so numb to reality as a culture that these politicians hold us in such low regard that they are comfortable standing up there making these absurd statements and innuendo about it being an oil industry problem that the politicians will make better for us?

Lots and lots of other things that average Joe needs and consumes every day have also gone up and up (look at real estate for example). Certainly no more than gasoline has, but no one's bitching about that, or calling for hearings. Let the markets work. If you can't afford the gas, don't drive as much. Is there any real news out there?

Copyright 2006 David Speaker