Oil Economics

Jason Lewis on WBT has been ranting incessantly against everyone who dares complain about high gas prices. He's the main reason I've been driven to NPR for my afternoon commute.

The problem isn't just that gas prices are high. I can accept that war in the middle east and natural disasters along the coast of the Gulf of Mexico effect supply and therefore create upward pressure on the price of refined gasoline. I can also accept that speculators in the oil commodities market see these events and based on their expectation of supply shortages drive oil prices up even if those supply shortages never materialize.

However, All the major oil companies are posting record profits for the third quarter. Not just good profits but record shattering ones. If the high price of gasoline was just oil companies passing on increased costs to the consumer then their profits should not have been significantly lower or higher. After all, they were only responding to real changes in the cost of bringing their product to market right? No, instead it appears that they were using these unfortunate events to pad their bottom line. I have yet to hear any other reasonable explanation. Instead we get oil company apologists comparing the price of gasoline to milk and bottled water.

Competition should have kept profit margins steady. If one oil company tried to profit by taking advantage of wars and natural disasters then others could have gained a competitive advantage by selling their gasoline at a lower price point. They didn't. It looks like they all cooperated to exploit the situation. This collusion may not have been an explicit agreement but even an implicit understanding between the oil companies would be enough for me to support a congressional inquiry. I like the idea of a free market but if companies work together to undermine it then I have no problem with our elected representatives stepping in investigate the situation and restore the public trust. I hope the investigations find that nothing has been done wrong but to ignore the obvious signs would be irresponsible.

I would encourage you to write your congressmen and tell them that you support an investigation into gasoline prices. You may also want to write WBT and tell them that you are changing the station between 3 and 6pm. People have good cause to be disturbed by high gas prices. Jason Lewis is intelligent enough to understand both sides of the issue but he chooses to be condescending to anyone who disagrees with him. Perhaps he'll land BP as a sponsor and have no one to listen to the show.

tags: oil gas wbt