For the Economically Illiterate

Since when did it become a major ethical violation to benefit from the law of supply and demand? I continue to hear griping about the cost of gas and that it is the fault of the big bad oil companies.

Today's Denver Post Business section contains a story that starts out about gas prices going down. I was surprised to see this since you frequently see stories about the price of gas going up, but seldom see the story about it going down.

As I continued into the article, I noticed it was simply an opportunity for the Post to rehash a previous story they did on oil company profits:

"A Denver Post investigation last month found that record high gasoline prices were driven by oil refiner profit margins that had more than tripled in the past year. The nation's top five oil companies - Exxon Mobil, BP, Royal Dutch Shell, Chevron and ConocoPhillips - own 42 percent of U.S. refining capacity. "

My thinking today, as it was when I first read the story was, "So what?" Do I like paying more for gas? No. Am I going to blame the oil companies because I am so dependent on my car? No. That's like blaming the tobacco companies for making me smoke (I don't smoke by the way, but if I did, that is what it would be like).

I posted here about the rising cost of gas a couple months ago. Of course, it's all supply and demand. There is more demand than supply so the price goes up. That's it. But before you blame our dependence on foreign oil, keep in mind that there hasn't been a refinery built in the U.S. since the 1970s, which means that even if we took over the whole middle east and pumped all we could out of the ground, we wouldn't have the refining capacity to make it into gasoline. NIMBY attitudes have made it so difficult to build new refineries that the oil companies went ahead and made the ones they had more efficient and more profitable.

Can you blame them? There were years when oil was $10/barrel and they weren't making a whole lot of money. No one was sympathizing with them then.

Back to the article in the Post. My biggest concern is the fundamental lack of understanding that the people quoted in the story have about this topic:

"I know they're making record profits. Didn't Shell Oil make something like $9 billion in profits in the most recent quarter?" asked Dan Charogoff, 40, who was driving his employer's Chess Inc. truck. "As long as we have an oilman in the White House, oil companies will make big profits."

Actually Dan, it wouldn't matter who was in the White House right now, the situation would be the same. Actually, I take that back, with John Kerry in the White House, we probably would have had price caps leading to shortages and lines at the pump. I'm sure Dan would have liked that.

Chris Gallegos, 38, who owns Mr. Lucky's sandwich shop in Denver, said he didn't accept the explanation that gasoline prices rose after recent hurricanes in the Gulf of Mexico damaged equipment and pipelines.

"You notice they're not raising prices after this current hurricane. People were outraged before," Gallegos said.

Chris, the last hurricane went from west to east through the Caribbean and across Florida. The oil platforms and refineries are on the north and west sides of the Gulf of Mexico, so naturally, they weren't impacted.

Another driver said she has changed her driving habits in recent weeks.

"It's frustrating that oil companies are taking advantage of the situation," said Paulene Meyer, 31, sitting in her Toyota Rav-4. "I haven't gone hiking a couple of times because I'm out by Lowry, and it's a good drive to get to the foothills."

Waaaaahhhhhh!!!! I can't go hiking because gas prices are too high and its the oil companies fault because instead of walking near my home, I have to drive for a pretty hike. Give me a break Pauline!

Does the Post go Jay (Leno) walking to find the biggest morons in town or are we as a society just that gullible to the crap that is spit out by the newspapers and the talking heads.

Knowledge is power!