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Reaping extravagant profits from $4-a-gallon gasoline, Big Oil has been pumping out the company line in an effort to deflect public anger from itself: “We don’t set prices at the pump,” the executives lecture to us. “The price of gasoline is determined by the cost of crude oil, and that price is set by the free market.”
Wrong, wrong, and wrong.
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First, the market for crude is hardly “free.” Production of crude oil is controlled by an oligarchy, plus the price of crude is being manipulated by high-flying, unregulated speculators. Second, the price of gasoline is not only determined by the cost of the oil, but also by add-on costs attached by the handful of corporations that refine oil into gasoline. Third, these few refiners also constitute a price-setting oligarchy (otherwise know as Big Oil) that rips us off at the pump with $4-a-gallon gasoline.
Note that crude oil prices have fallen lately and consumer demand has also fallen, yet the price we consumers pay for gasoline has remained high. Curious, huh?
This perversion of the law of supply and demand comes courtesy of BP, ExxonMobil, Shell, Chevron, and ConocoPhillips – the chief oligarchs of Big Oil. To keep our prices high, they simply squeeze back the amount of gasoline produced in their refineries. They are now operating at only 82 percent of their processing capacity, an artificial manipulation that has cut the supply of gasoline by 900,000 barrels a day. By squeezing supply, they keep pump prices from falling, thus squeezing more money out of our wallets. With this squeeze play, refinery profits doubled in the last year.
Big Oil could easily process more gasoline, lower our prices at the pump, and still make a big profit. But that’s not enough for these masters of greed – they’re out to make a killing.
“Refiners’ big profits keep gas prices up,” Austin American Statesman, May 18, 2011.