Fossil fuels Oil Refinery

Published on July 11th, 2013 | by Jo Borrás

29

Oil Refineries Have Been Price Gouging Americans for Over 2 Years

Oil Refinery

“For 20 years, the rule of thumb was that if you made $5 a barrel east of the Rockies, that was a good profit for a refinery,” says Tom Kloza, chief oil analyst at the Oil Price Information Service. Tom’s company exists solely to track energy markets, and what he found should enrage pretty much everyone. Over the past 2 years, Tom “saw a period in the Midwest where refiners were making $40, or $50, or even $60 on a barrel on gasoline.”

That’s right kids, since gas prices peaked in 2008, the cost of oil has gone down sharply. More to the point, the cost to manufacturers- the cost of getting fuel to you, the consumer, has gone way down … but many Americans “haven’t seen a corresponding decrease in gasoline prices.” This is happening, in a recession, even as record windfall profits flow to BP, Koch Industries Inc. and other large, Midwestern oil refiners.

According to industry experts, the correlation between the price of oil, the cost to produce gasoline, and the retail price of gas at the pump has become so utterly f***ing wonky (that’s a scientific term, by the way) that it calls into question one of the central benefits touted by those “Drill, baby! Drill” retards supporters of the Keystone XL pipeline: that the project would lower American gas prices by providing Gulf Coast refiners with a steady flow of cheaper oil from Canada.

 

Insert profanity-laced rant about Big Oil, the Koch Brothers, BP, etc. etc. (Sorry Jo, – Ed)

 

This price gouging is most evident in the Midwest, where “we’ve had crazy up and we’ve had crazy down” said Kloza. “Everything we’ve seen so far in 2013 in the Midwest has had nothing to do with crude. It’s had nothing to do with Keystone.”

Here’s an industry analyst- another industry analyst, I should say, that says the Keystone pipeline’s proliferation of dirty oil won’t lower prices.

What about my claims of oil refinery price gouging? Wikipedia (hardly an authority, I know – but just go with it) defines Price Gouging as “a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters.” Let’s see how this stacks up, shall we?

Criteria 1: CHECK!
A situation in which a seller prices goods or commodities much higher than is considered reasonable or fair? We have an 800-1000% more profits than historical norms leading to unprecedented record profits

Criteria 2: CHECK!
A rapid increase in prices occurs after a demand or supply shock? Gas prices shot up during the 2008 summer spike (which was caused by a spike in oil prices), but didn’t follow production costs (supply) back down.

Looks like we’ve got price gouging! All we need to do now is find some noble attorneys willing to sue these oil refining bastards back to the stone age or – better yet! – skip their bulls*** entirely and just use ethanol.

Yeah, I like that one.

 

PS: Big Oil is the Devil.

 

Sources: Oil Price Information Service, via Philly.com and Inside Climate News.




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About the Author

I've been involved in motorsports and tuning since 1997, and write for a number of blogs in the Important Media network. You can find me on Twitter, Skype (jo.borras) or Google+.



  • UKGary

    Perhaps if the US government taxed fuel at the same level as European governments so that gas cost around $9 per gallon US motorists would learn to love fuel efficient cars and to avoid unnecessary driving. Who knows, some of them might even re-discover their feet and walk or cycle to the local shops! With prices that high, the oil companies would not dare to retain such margins and would in any case find themselves serving a shrinking market.

    Such a tax level should also make a dent in the deficit and help to fund measures such as public transport and affordable health care for all bringing back in some measure the “for the people” element of the American ideal – Government of the people by the people for the people.

    • Jo Borras

      I like what you’re saying, but we currently subsidize oil and fuel in the US. Also, we have a fiat currency that isn’t commodity backed, so deficits are only “arguably” a problem, and people on both sides of the aisle say high deficits are good. Some on both sides say they’re bad. Most of them are idiots. American government sucks. Take me to the UK!

      • USGOVNSA

        They don’t allow GMO corn in the UK.

        • Jo Borras

          And … ?

    • GregS

      So you’re saying it’s OK for the Government to gouge the consumer with a $6/gallon tax, but it’s not OK for the company that actually produced the gas to sell it for $3.50 (which also includes about 50c tax)

      • http://www.greenbusinessowner.com/about/ Scott Cooney

        Greg, clearly the government doesn’t charge $6 per gallon in tax….seeing, as how the *total* cost of gas is less than $6 per gallon across the entire U.S., including all taxes. Thanks for proving that you drill-baby-drill knuckleheads are, in fact, knuckleheads.

      • UKGary

        Yes, because all governments levy taxes on their citizens in order to provide pubic services.

        Without taxes, there would be no healthcare, or education other than for those who can afford it, and little or no public infrastructure.

        If I am to be taxed, I would much rather the tax system be directed in a way that encourages citizens to act in a socially and environmentally responsible manner – taking into account the polluter pays principle than that my income tax rises or that I get sick and can’t afford health care.

        • Jo Borras

          I’m with you 100% but that’s not how America’s currency works. That’s how a lot of people THINK it works, because that would make sense and it’s how most currencies work, but it’s not.

      • Jo Borras

        You don’t seem to understand … much.

        • GregS

          I understand a lot more about oil industry than you do… other things maybe not.

          • Jo Borras

            If you’re talking about deficits in this context, then I highly doubt that. Have fun being ignorant, though – all this knowledge is a terrible burden.

      • T Adkins

        The US Gov charges 18cents per gallon in tax. If you get 25 MPG and put in1000 miles of driving you pay $7.20 in tax. Over 10 hours of driving for less than $8 in tax. Tax has not been raised in 20 years and that $8 pays for a fraction of an hour of work for a highway worker. The tax does not even cover fixing a pot hole and now we have bridges just falling into rivers.

        We have higher MPG mandates coming down the line so even less tax money for every 1000 miles of driving. So ‘London Bridge is falling down…’ and you would rather be paying price gouged for pure ‘record breaking’ profit to the oil man instead of paying more monies to the tax man and getting a return of your tax dollars in road work.

        • Jo Borras

          Very well said! I wish I could give you more than 1 UpVote!!

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  • Markwbrooks

    An interesting
    story, but your missed the real story here. Oil sands synthetic
    crude ( and other heavy oil sources) now make up a large part of the gas you are pumping into your cars tank.

    Each barrel of oil sands crude uses 2170 cu ft of natural gas to be steamed out of the ground and then turned into synthetic crude BEFORE it gets to the refinery.

    If you took that Natural gas and turned it into electricity instead, a car like the Chevy volt could go as far on the Electricity as it could on the gas. No wonder Oil streets biggest shareholders are
    funding EV attack groups, such as the national legal Policy center… Once EV technology goes mainstream many extreme
    Oil companies will fall like a house of cards.

    • UKGary

      These are not the only concerns – In dry areas, I would think that there might be serious questions about the sustainability of using the amount of water required to extract oil sands and or gas by fracking – not to mention the possibility of contaminating an already scarce water resource if the process is not carried out with a great deal of care.

    • T Adkins

      Oil sands people are looking into other means to not use that natural gas. They would very much like to sell us the natural gas in addition to their oil sands.

      Big Oil has to attack the EV market, as long as BigOil is sitting on $27-29 trillion in known recoverable reserves they will do what they can to protect the money. If something as small as 0.04% can upset an industry like oil by over $1 billion, just think of the potential that EV can wreck if it can upset oil by even a full 1%. I would like to think that EV among other industries has that potential.

      • Jo Borras

        Excellent points.

  • Turbofroggy

    I love that they are price gouging at the refinery. Since our government doesn’t have the ballz to raise the gas tax, this will do just fine. However the profits go to the oil companies and not to infrastructure like it should. But it does make alternatives like electrics and advanced drivetrains cost effective. At $4/gallon gas you have to get around 60 mpg to have the same TCO in 9.2 years as the current electrics.

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  • cesoir45

    You think!!!! We could have been having car mileage like this for years. Remember the the gas crisis in the 70’s. That is over 30 years of saving our environment , but the oil company’s wanted to drill and drill, just like they gouged and gouged us for years. Our government ,you know the supposedly the good guys were letting it happen and filling their pockets with money. I actually wonder how many people have been killed while trying to save energy in this world. Through their inventions. They just found a car in the junk yard from the 50’s that was suppose to have got 200 miles to the gallon. Maybe it was true, maybe not, but we are way behind in our technology in saving our earth and our earth resources. They better find a way to fix the global warming and quick.

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