Does anybody have any proof that the Oil Companies are gouging you?

Question

And don't give me that tired old record profits crap. Do you know how much they spend in research, employees, and anything else? I see no reason to demonize companies that supply us with things we need. Only actuall proof, please. Even the Congress can't come up with anything. What does that tell you? Maybe Bush is paying them off. Now I've indavertently started a new conspiracy. D'oh!

Answer 1

Gas prices have been dropping here for almost 3 weeks...we are at 2.69 a gal now...
I have no proof that we are getting gouged.

Answer 2

Your avatar is aptly named.

I like the concept question and you have rabid corporate haters (read: mostly ignorant of basic business economics) on the attack.

A couple of add-on questions:

> what the heck does CEO pay rate have to do with gouging?

I know of casino execs in Las Vegas who make more than some of the salaries listed in one response and casinos don't produce any product.
SO WHAT? High pay means nothing other than "run a big corporation, make profits, get paid." Actually, looking at the list, some of those oil execs are probably underpaid.
(BTW, almost everyone who works, including HRC, BO, and union savings plans, hold oil company stocks and benefits when the stocks do well)

> what the heck does annual increase in profit have to do with gouging or being a bad corporate citizen? (and as mentioned, it is profit margin that counts) One of the national home building companies has increased profits by 100% over last year - are they gouging? Should we go after them?

> Enron?? Not even in the same ball park. THEY co-opted an accounting firm to the dark side and did so knowingly (and both firms *failed* as a result).
The result was the Sarbanes-Oxley act and government investigations and such criminal activity is almost not possible in today's environment.
(btw, for you big government fans, Sarb-Ox is a main reason the US is losing jobs and finance markets to overseas locations, especially London)
*even MORE discouraging for the US haters and Bush haters* - the Enron 'problem' arose under Clinton's lackadaisical enforcement of rules and was prosecuted by the Bush administration.

> there is more about refinery maintenance and capacity and why corn-derived alcohol is bad for the economy (check the price of meat next quarter - who profits from sugar tariffs??) but it wouldn't sink in for non-believers and is preaching to the choir for others so phooey, I quit typing here.

OH, btw, there is no evidence of gouging; not in previous investigations, not in present ones. A parking ticket does not make a driver a convicted felon and the occasional *minor* infraction of complicated anti-trust laws do not make oil companies complicit in price gouging.

Answer 3

R&D, employees, and other expenses all come out of accounting proffits. And, yes, it's true oil companies are making record profits. It's largely a windfall. Demand is increasing faster than suply, and uncertainty and speculation is driving up prices. They benefit from that. After the last Gulf War, oil flowed freelly and prices were quite stable - oil companies barely made profits at all and had trouble justifying thier capitalization. It sucked to be in oil then, it rocks now. That's business - any business.

Answer 4

Why does gas go up around holidays? Why is it almost four bucks in some areas when a barrel still cost the same as five years ago. Yes they gouge, why wouldn't they.

Though it isn't just them, why does the state of PA get almost 55 cents a gallon for taxes, amongst federal taxes as well.

It's not just gas, why is milk so high? Bread? Eggs? Don't stop at just the gas. It's everything, metals, fabrics, just about any type of raw material. I said it once and i'll say it again. Rule the day when the working man has no where to go.

Answer 5

If supply and demand, isn't enough proof....what supply and demand the proof how can that be?? I'm glad you asked.
Oil and gas prices are largely determined by supply, demand, and speculative trading.
When supply is down prices are up, there is no incentive for refiners to raise supply and lower margin, so they keep it artificially low.

Memos Show Oil Companies Closed Refineries To Hike Profits
http://www.huffingtonpost.com/jamie-court/memos-show-oil-companies-_b_6980.html

Group: Internal memos show oil companies limited refineries to drive up prices
http://rawstory.com/news/2005/Group_Internal_memos_show_oil_companies_limited_refineries_to_drive_up__0907.html

The Oil Industry, Gas Supply and Refinery Capacity:
More Than Meets the Eye
An investigative report presented
by Senator Ron Wyden
June 14, 2001
http://wyden.senate.gov/leg_issues/reports/wyden_oil_report.pdf

Big Oil Looking for a Government Handout
http://soc.hfac.uh.edu/artman/publish/article_375.shtml

Obviously Willis Jeffords didn't fail economics, because he never took it!
or else America isn't free market like i was told in econ class.
http://www.consumeraffairs.com/news04/2006/01/il_gas_gouging.html

Answer 6

In the past we had price controls. Republicans ended that so now we have record profits. Do you have any proof that the oil companies are not gouging consumers? Btw, look at the CEO's salary's and also look at who the oil companies gave lots of cash to in the 2007 elections. Yeup, Republicans. Congress has been useless the past 6 years..

Answer 7

Anyone who took even the most basic economics course knows that profit margins, not total profits, are an indicator for, but not conclusive proof of, gouging. The oil companies profit margins range from 7 to 9 %, well within the acceptable range for non-gouging industries. Starbucks profit margin is about 11 percent, so liberals who accuse the oil companies of gouging should boycott Starbucks first. No lattes for liberals !

Answer 8

This is the pay for the top executives of ExxonMobile:

http://finance.yahoo.com/q/pr?s=XOM

Pay Exercised
Mr. Rex W. Tillerson , 54
Chairman, Chief Exec. Officer, Pres, Chairman of Fin. Committee and Chairman of Exec. Committee $ 4.30M $ 2.08M

Mr. Donald D. Humphreys , 59
Principal Financial Officer, Sr. VP, Treasurer and Member of Management Committee $ 2.50M $ 2.46M

Mr. H. R. Cramer , 56
VP and Pres of ExxonMobil Fuels Marketing Company $ 2.36M $ 6.35M

Mr. J. Stephen Simon , 63
Sr. VP $ 3.09M $ 4.58M

Dr. S. R. McGill , 64
Sr. VP $ 3.09M $ 4.17M


Dollar amounts are as of 31-Dec-06 and compensation values are for the last fiscal year ending on that date. "Pay" is salary, bonuses, etc. "Exercised" is the value of options exercised during the fiscal year.

This is a link to a chart that shows how often they have stock splits to keep the per share price from going to levels they deem too high:

http://finance.yahoo.com/q/bc?s=XOM&t=my

Where I live most workers make between $6.50 per hour and $12.00 per hour.

Doctors more.

These guys could buy up entire towns with those kinds of salaries.
And how did they get them so high?

Since shareholders apparently have little or no say in company policy,,,,they vote for higher raises themselves....un-opposed!

Kind of like congress does.....face it corruption is rampant in this country.

Answer 9

Yes, here's the proof. They have kept demand artificially high through their actions of not building new refineries for over thirty years. There is no supply problem, only a refining problem. Why do oil companies have spring maintenance when they know demand starts to rise? Why not in the fall when demand starts to fall? Why are they warning us that the making of ethanol will drive the price of gasoline up? I thought in a competitive market it would drive the price down due to the competition of having another choice of energy? Am I missing something?

Answer 10

Gas prices are dropping. Where I live, it is about 2.64. People (cough cough *Democrats* cough cough) make this kind of stuff up so the Republicans look bad.

The gas companies DO have to rebuild their old facilities, pay employees, pay for research, and many more things. Not long ago, they had to build a lot of new oil mines, thus, making gas go up. I mean, doesn't that happen to every business when they are rebuilding?!?

Answer 11

I have no proof about gouging.

It's obvious that the oil and auto industries DO stifle innovation, though.

And receive many types of corporate welfare.

We are cloning animals but a car that doesn't need oil/gas is beyond us. Yeah.