The (second) Great Oil Robbery

Saturday, May 19 2007 @ 12:53 PM MDT

Contributed by: Diogenesthe fist being the theft of Iraqi oil

The Great Oil Robbery
By Dave Lindorff
5-18-7

In case you’re wondering why crude oil prices are down from last year, hanging around at about $60 a barrel, while gasoline prices have soared past $3.10/gallon nationwide, just check out the latest profit reports from the oil companies. They are at record levels.

The answer for this seeming contradiction is simple: Americans are being robbed blind by the oil industry.

Sure, the oil companies, and their PR and lobbying agency, the American Petroleum Institute, will give you all kinds of reasons for higher gasoline prices at a time of falling crude prices: problems at two refineries in Texas and Oklahoma, rising demand or whatever. But the real answer is that there is simply no competitive market in this industry.

As Tim Hamilton, a researcher and petroleum industry consultant with the Foundation for Taxpayer and Consumer Rights, observes, the oil companies all store their crude oil and refined gasoline in the same tanks, and all know exactly how much inventory each other company has, so they don’t have to meet and collude on pricing in order to reap the huge rewards of deliberate supply constraints.

Says Hamilton, “Years ago, you had companies that would try to guess when the other companies were going to have supply shortfalls of gasoline in the summer. They’d ramp up their own gasoline refining and then supply the market at a lower price and eat their competitors’ lunches, the same way General Motors would do if Ford had a problem on its assembly line. But today, no oil company would do that. They all benefit by keeping the supplies tight.”

Hamilton says that the oil industry has in practice conspired to limit refining capacity, so that companies can keep pushing up the price of gas artificially-only they’ve done this without ever having to meet in secret and cut a deal, because they all have complete competitive information on each others’ inventories, internal pricing, and refinery capacity.

“There’s no correlation any longer between crude oil prices and gasoline prices,” he insists. “Crude could drop to $10/barrel, and you could still have gasoline go to $4/gallon. All the crude oil price does is set a floor on gasoline prices.”

As an indication of how much control the oil industry has over retail gasoline prices, Hamilton points to a study he did, looking at the price of gas approaching Election Day. His results are truly disturbing.

<big *snip*>

Until the public recognizes that the illusion of competition carefully maintained by the oil industry and its backers in the government is just that -an illusion- this astounding rip-off will continue.

http://www.rense.com/general76/great.htm

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