The Daily Switch

The Phantom Evil Oilman Price Gouger

Posted by Ender on February 18, 2009

If you have ever had a conversation with someone who has grievance issues you always hear about a guy I like to call Mr. Phantom Evil Oilman Price Gouger. You can call him Mr. PEOPG for short. Now according to Mr. or Mrs Grievance Mr. PEOPG is deliberately raising oil prices just to stick it to the middleclass working man. Apparently, Mr. PEOPG is so powerful he can raise and lower prices at will. He is so malicious that he waits until disasters or catastrophes to raise oil prices. A truly, horrible human being, if he can still be considered one, that is.

The latest round of criticisms hurled toward Mr. PEOPG have been caused by people hearing that oil prices have dropped, however, they see no requisite drop in gas prices. Now, before you go get your pitchforks, torches and lynching ropes let’s see if we can find a reason for this without hanging MR. PEOPG.

I was reading Stefan Karlsson’s blog and he posted a story that explains why the price of oil has gone down but the price of gas has stayed the same.

In short, the official price that you often hear about is actually a specific type of oil called “West Texas Intermediate” crude (or WTI). This is a higher grade than the oil that is used in your cars. Karlson’s explains “demand has fallen more in America than elsewhere, the WTI has fallen a lot more than other oil. Usually, the imported stuff has been cheaper which is why refineries have focused on them, but now unusually enough, the WTI is actually cheaper.”

So, the price of oil commonly reported in the media is not the same oil that you put in your tank. Thus, it causes a drop in crude oil price, but no drop at the tank. So, Mr. PEOPG it looks like you are off the hook yet again for your conspiracy to take all my money.

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2 Responses to “The Phantom Evil Oilman Price Gouger”

  1. hpx83 said

    Lol! Being from Sweden (like Stefan Karlsson – who’s blog I also read frequently), we do not need any PEOPG, because we have something to the amount of 300% taxes on gasoline. Don’t know the exact number, but it sure isn’t cheap. All due to some classical environmental communism….

  2. dan said

    Well, you make a fair point in your story (about the price of imported crude as opposed to WTI), but the oil gouger is not a phantom.

    Remember when gas was $4 a barrel and the oil companies unanimously posted their highest profits (not gross-profits) ever? The profits those quarters were mind-bogglingly high, enough so to spark public outrage.

    Do you remember the oil companies defense? If you don’t I can refresh you, it was: “We are making the same percentage we always make, the price of curde unexpectedly skyrocketed, equaling more costs for the consumer at the pump.”

    The problem here is simple. Let’s use rounded off number just for convenience–they’ll be close enough to the real figures for the purpose of this exercise. Imagine oil companies make 10% profit for every gallon pumped. And let’s say a gallon of gas cost 1$ at the end of the Clinton years. 90 cents of every dollar went to suppliers, refiners and taxes, and 10 cents went in the oil company’s pocket.

    Now let’s imagine that out of the blue the price of crude quadrupled. So now the cost to the company for every gallon is $3.60. So the oil company has two options here: they can continue to make 10 cents a gallon making the total consumer cost $3.70 a gallon, a figure which, incidentally, has made those companies extremely wealthy. The other option is that they can continue to make their 10% profit, which means the total cost to the consumer is now close to $4 a gallon. In this model, the company has effectively quadrupled their profits without adding any value whatsoever.

    I understand that businesses aren’t charities, and they aren’t necessarily entitled to make things easier on the public. But they did benefit greatly from the oil crisis, and they acted as if they were helpless vicitms bound by the decisions of evil foreigners.

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