With the economy in shambles, for the past seven years we have seen gasoline prices rise uncontrollably, and somewhat unexplainably at the pumps. It’s been no secret that oil prices are in large part based upon speculation and future forecasting. It’s also been no secret that when barrels of oil are sold at rising prices, those rises are exponentially reflected at the pumps almost immediately – though the gas you are pumping was sold and refined on average of a few weeks prior. It takes a minimum of two weeks, and sometimes up to two months, for a barrel of oil to reach the pumps once it is purchased on the international market. But why then do we as consumers see a rise at the pumps almost instantaneously? And why has there not been any oversight into this matter?
Oil conglomerates such as ExxonMobil, Shell, and virtually every other oil company in America today have seen record profits. As each previous quarter ends, and a new quarter begins, we continue to hear of record profit earnings during quarterly earnings conference calls. And this last quarter proved to be no exception.
ExxonMobil was pleased to report record third-quarter profits – over $14 billion in PROFIT! The largest American oil company flew past expectations and estimates with a posted net income of $14.83 billion on revenue totaling $137.7 billion in the third quarter. That breaks down to $1,865.69 in net income attained PER SECOND of operation in the third quarter.
During peak demand times, we saw the price of a barrel of oil reach astronomical prices upwards of $145/barrel. It was not until the past few weeks we began to see any sign of relief, as a barrel of oil was trading down in the range of $70-$80 per barrel, and currently sits at roughly $65 a barrel. This translated into gas prices dipping below $3 per gallon for the first time in over a year, and much needed relief for American consumers who have already been suffering because of the waning economy.
What can you be sure of in times like these? Oil companies are making record profits at our expense. This practice of raising the cost of gasoline at the pump just as soon as the cost of a barrel of oil increases translates into instant profit with no overhead. The product has already been shipped, refined, delivered, and pumped into consumers automobiles. The only difference is the electronically changed price per gallon paid at the pump.
There needs to be some kind of oversight into this matter. It only hurts the economy when the oil companies make windfall profits like those seen over the past few years. Demand dramatically decreases, and the travel industry suffers as a result. Less money is spent in worsening economic times such as that which we are living through currently, and rising costs of oil do not help. It has been a welcome sigh of relief being able to fill up my car for $100 again. But in such an unstable market, the oil industry needs some oversight – oversight perhaps the IEA could provide and institute, an organization created after the first oil shock in 1973 as a result of the Arab-Israeli war. The IEA has flexed its power twice since its creation, opening up reserve oil into the supply chain during the Iraqi-Kuwait war as well as during Hurricane Katrina, in efforts to stabilize the cost of gasoline.
Whatever is done, something needs to happen. Someone needs to take total power away from OPEC and create an international oversight committee to regulate such affairs. After all, we are nearing peak oil production and there remains an uncertainty about the future state of oil reliance. More resources MUST be invested in researching, developing, and implementing alternative energy sources. Sure ethanol is cleaner burning than gasoline, but if someone has an E-85 Chevrolet Tahoe in Southern California, they have to commute to either Camp Pendalton or Northern California to fill up using ethanol from an ethanol station. The infrastructure just is not there like it is in energy dependent nations such as Brasil.
This quarters record profits postings from all major oil companies is an outcry – a plea – for regulation.
Editor’s Note: I have posted the relevant 45 second snippet of the above video on my other site as it won’t embed properly on WordPress. [Linked]
Photo Credit: A Guy with a Camera – Flickr
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