Is it really the oil companys’ fault?

Is the price you paid this morning to fill up your tank really the oil company just making, “obscene profits” off you and “benefiting from the unrest in the middle east?” Is the pump price really the oil companys’ attempt to “gouge” the American public? The answer is “no,” despite what many people are thinking and saying. More about that in a minute. But what if they are? So what? The oil companies are PRIVATE companies; really no different than a couple buddies that have a house painting business or a ‘mom and pop’ gas station- they’re just bigger! The goal of ANY business is to make money- as much money as it can! Nobody begrudges a couple of carpenters who make record profits from building homes following a tornado or a realtor who makes a bundle during a boom in the housing market. So, why is there so much animosity towards the oil companies? How are they any different aside from the size difference?

Let’s be honest. This so-called animosity is nothing more than ‘jealousy.’ Nobody that’s lucky enough to own mineral rights over an oilfield or own stock in an oil company, whether they are a Democrat or a Republican, is complaining! They’re smiling all the way to the bank, as they should be; and as ANYONE who is that lucky would be. If you’re one of the oil company ‘haters,’ and tomorrow you inherited 10 oil wells your long-lost uncle left to you, you’d switch sides in a second- smiling as you cashed your monthly check and cheering on the rising price of crude!

Some people believe that the oil companies make, “enough” and should lower prices; but would they ever ask, or expect, another business (like the painters, carpenters, realtors, etc.) to voluntarily cut their profits? NO.

The ONLY reason that we hear about people’s anger at the oil companies is because we need oil for EVERYTHING and we all feel a price increase. Businesses take advantages wherever they can to increase their profits and it is ALWAYS at the consumer’s expense- that’s the nature of commerce. Usually, though, price hikes on a particular product only effect a small percentage of the population- not enough to make it “news worthy.” If current events were spiking the profits on “Pop-Tarts” it would annoy the heck out of me and a few million other people that love them like I do, but it wouldn’t even get a mention on the local news.

It’s just not right to begrudge the oil company whatever profits they are able to make from what do. Any more than I should begrudge you for making as much as you can at what you do! If you don’t like the price of gas that much, don’t buy as much. If demand gets cut then the price will drop and oil companies’ profits will drop. Make your point that way. But don’t keep buying gas at the pump and then acting like the oil companies owe you a lower price- they don’t. And don’t let your government try to regulate what a company does, within the law, to make the most profit it can or the next company they come after may be yours or the one you work for!

Now, about who’s fault the price of gas is. Lets start by looking at what goes into a price of gas- some things you may not know about.
Did you know that $0.18 of every gallon you buy goes straight to the federal government, that does absolutely nothing to justify their getting the money. Also, the states take as much as $0.68 of each gallon you buy. So, for those who are mathematically challenged, that’s as much as $0.86 of the gallon price goes to your state and the federal government that doesn’t have a darn thing to do with getting the oil out of the ground, processing it into fuel or delivering it to your local gas station! That’s roughly 22% of the price of the average gallon of gas today; and it’s almost 35% of the price of a gallon of gas before it started it’s recent rise! Now who’s making obscene profits?

That leaves the “oil company” between 88% (today) and 65% of what you paid for that gallon of gas to make a profit from. Not bad, you say? WHOAH, boy!! Lets not forget the cost of exploring for oil, drilling for oil (rig and machinery costs as well as wages paid to workers), moving (building pipelines and/or shipping) that oil from the well to the refinery; not to mention the cost of building and operating the refinery! Then there’s the cost of getting the fuel to local distributors. ALL this has to be paid for by the oil company out of that 88%-65% of what YOU pay at the pump. Don’t forget taxes that the oil companies have to pay out of the profits that they do make!

I won’t argue that the oil companies are making a ton of money; but my point is that their profit margin is a lot more slim than most people realize! There are not many people that would jump into a business with do much overhead and such a slim profit margin. And keep in mind that while these are major corporations and conglomerates now, but they all started from a relatively small number of daring men in the early 1900’s who had the foresight to see that we would switch from coal to oil as an energy resource! Like it or not, big oil is the “American Dream” in action and what everyone who starts a business dreams about.

When most people hear about the price of oil (and the resulting fuel) going up, they assume that it is the oil companies setting the price. This is incorrect; at least partially. The price of oil is HUGELY effected by unbelievably complex financial markets and their “speculators.”. According to F. William Engdahl of the Centre for Research on Globalization (, “As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds.” Speculation is nothing more than a fancy name for legalized gambling where people ‘bet’ on the future price. In 2006 a Senate investigation claimed that $25 of the $60 barrel price (at that time) was the result of speculation. If you extrapolate that out to today’s oil price ($105/barrel), then $43.75 of today’s barrel price is based on speculators and SHOULD be selling at $61.25!

With all these ‘fingers in the till,’ when it comes to the price of oil and fuel, is it reasonable to direct your anger towards the oil companies? No reasonable person should think so! There’s plenty of reason to be angry (I sure am!) but let’s direct it towards the right parties- government and “speculation!” Gambling is illegal in most places, including in New York City and Chicago, where a lot of this “speculation” goes on but this particular form of gambling is not only tolerated but encouraged by banks, investors and to some degree the federal government! People argue about all of the negative social ramifications of traditional gambling but these finical gamblers are ruining our economy and pushing us towards financial collapse while hiding in the shadows of America’s misplaced anger at the oil companies! It’s time to wake up and redirect our anger at the appropriate folks before they destroy our economy and our way of life. This country was founded on hard work and making things better and faster than anyone else and it’s about to be brought to it’s knees by ‘money changers’ that don’t produce anything but spend their days playing a shell game that’s the equivalent of economic russian roulette!


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