Gas Prices: Enron All Over Again

By Lee Coleman of Aloha, Oregon. Lee is a former member of the Oregon GOP's state policy board and a founder of the Oregon Log Cabin Republicans. He is now the Democratic candidate for state representative in HD-26. Previously, Lee contributed "Bush's Social Security Plan: Unfair and Disastrous".

What's going on with gasoline prices is this: It's Enron all over again.

The oil companies are deliberately gouging the public, just as are the drug companies, and the health care industry, because they know they can get away with it.

The Bush-Cheney doctrine, as far as industry is concerned, is laissez-faire capitalism as free as possible from any rules or regulation.

When it comes to gasoline prices, Democrats have a perfect opportunity to score big points in the coming congressional elections by telling the public that if they want controls put back on the oil company gougers, they can do so only if they elect Democrats to the House and Senate BOTH.

Karl Rove understands the potential lurking in this area. That is why his puppet, George W. Bush's April 22 radio speech emphasized that gasoline prices were too high (blaming the Arabs) and that he now supports alternative fuels and fuel cells. He's trying to fool people into thinking that there's no way out other than buying less oil and so was his puppet, Senator Nelson (Florida), who supplemented the radio broadcast.

We can not let Rove and his puppets get away with this bit of misdirection. We have to attack the problem where the problem is: in the oil company executive offices. Enron was a perfect model for these rogues. The only thing Enron messed up on was its own internal fraud and the losses caused by the fraud; the oil companies are not likely to follow that route. But they do have to be controlled.

Comments

  • THartill (unverified)
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    What a load of crap!

    This has nothing to do with Enron or "price gouging".

    The oil companies make 6 cents off every gallon of gas sold. Whoop-tie Doo!

    People who write this type of garbage are puppets for the oil companies. We NEED high prices to get every lazy-assed American to realize that cheap and plentiful oil is over. Furthermore the only country that high prices benefits is the U.S. We must bid the price sky high so those 15 million barrels a day keep coming to our shores.

    Not only is this post total hogwash, but not even a mention of cutting subsidies, which should be the first step to raising prices, which is a GOOD thing.

  • pdxdem (unverified)
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    thartill, I hate to inform you but you quote of oil companies only making Six cents per gallon off gas is not correct. The wholesale price of a gallon of gas is over two dollars a gallon which is sold to the filling sations by the oil compaines who own the refineries. The filling stations are the ones making .06 cents per gallon proffit not the oil compaines. A company dose not make the kind of proffits we have seen off of six cents per gallon my friend.

  • Ben Dover (unverified)
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    The big oil companies are making obscene and record profits this year. They are still getting tax breaks from Bush.

    Those who are content with high fuel prices had better realize that we are in for a round of inflation on consumer goods like we have never seen before. If you think food is expensive now, just wait a few months. That $5 hot dog or $2 ear of corn should clue you in as to how much everything we purchase and use ties in to the price of fuel.

  • THartill (unverified)
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    You mean sorry for dis-informing me?

    After crude oil costs, taxes are the second largest contributor to the price paid at the pump. Together Federal and State excise taxes on fuel account for an average cost of approximately 62 cents per gallon.

    Many studies have said they make between 5 and 20 cents per gallon, Cononco Phillips made 9 cents last year. But the volume is what counts. I could come up with a long list of companies that make much higher profit margins, but there will obviously be no calls for "price gouging" for them.

    But someone please tell me why we need lower gas prices? What good will this do? The feds are inflating our currency at 12% a year and that must go somewhere, why wouldn't we want it to go into gas, which is the most destructive product on earth.

    We need to start using LESS oil and become LESS dependent on it, so why do we want Government to come in and lower the price? Does anyone care about our environment anymore or do our priorities change when we can "get Bush" and those damn oil companies? The only way to "get those oil companies" is to raise the price so people use less, not lower it so we keep using more.

  • colorless green ideas (unverified)
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    hm...

    The oil companies are deliberately gouging the public, just as are the drug companies, and the health care industry, because they know they can get away with it.

    The Bush-Cheney doctrine, as far as industry is concerned, is laissez-faire capitalism as free as possible from any rules or regulation.

    i'm sorry, but the bush administration has been the most protectionist since herbet hoover and smoot-hawley! they don't care about laisezz-faire, they care about their corporate cronies. if laissez-faire helps them, they'll use it, if regulation helps them, they'll use it. socialism for the rich, free-markets for the poor. anything to keep profits stable.

    the pharmaceutical, and health industries are two of the most highly protected industries in the country. pharmaceuticals get monopoly protection through patents for their designer drugs keeping prices up to 400 percent higher than they otherwise would be, they also get "reimportation" restrictions from drugs they sell outside our borders to countries that use the bulk purchasing to bargain down the price, and did i mention that they have legal mandates that disallow the government from using bulk purchasing to bargain down the price for medicare? not even to mention how much of their reasearch is done by the nih, and other public institutions. how can that be called a free market?

    i'll rail against healthcare, insurance, and the ama some other time.

  • THartill (unverified)
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    CGI

    Isn't it funny how everyone has their own idea of the "free market"?

    The Right thinks NAFTA and CAFTA are free market and the Left thinks Bush is free market.

    I want to know where these people are educated, it obviously isn't out of any highschool or college textbooks.

  • Gil Johnson (unverified)
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    I'd consider myself mostly on the Left and I don't think of Bush as free market. Bush has more in common with Mussolini than with Adam Smith.

    I believe the previous commenter was thinking of the Bush Administration's dismantling of government regulation of business.

  • Suzii (longtime Lee Coleman fan) (unverified)
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    Thartill sez: But someone please tell me why we need lower gas prices? What good will this do? The feds are inflating our currency at 12% a year and that must go somewhere, why wouldn't we want it to go into gas....

    You know, I could well be convinced that we need to add $2/gal to the gas tax (I'm a fan of the principle of eating food that's raised near your table and definitely not a fan of California strawberries), but I'd hate to agree with somebody who thinks a dollar buys 12% more than it did last year.

    And, you know, I'm pretty nearly convinced already that a windfall profits tax (completely different topic from the gas tax in the previous paragraph, I know) on the oil companies would lower gas prices, not raise them. I'm reasoning by logical extension, here. Say, for instance, corporation X is selling gas to your local mom-and-pop at $2.35/gal and we establish a 100% windfall tax on revenue above $1.85/gal. Obviously, the folks at X would see a much greater benefit to guarding brand loyalty by dropping their price to $1.85 than to sending the extra to Uncle Sam. (Also obviously, we wouldn't pass a 100% tax, but as that number moves lower, the desire to protect brand loyalty continues to squelch the desire to raise prices enough to recoup the confiscated profits.)

    UNLESS, of course, the oil companies are in cahoots and all agree to raise prices together. Then the Shell station wouldn't have to worry that the Arco was charging 50 cents less (can you imagine the lines?). In that case, though, we'd have evidence of a trust that even this Congress couldn't deny, we'd see pressure with political teeth brought to bear, and we'd get, again, lower prices.

  • colorless green ideas (unverified)
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    tharthill,

    i'd add one caveat--most of the left* agrees that C/NAFTA are "free market" (well, "free trade") along with the right.

    my response to this is always "well do you think bush's 'free speech zones' are 'free speech'"? of course not, only someone who only pays attention to titles--and wingnuts--would believe that.

    i agree with gil johnson; bush has increased economic centralization and has more in common with mussolini than adam smith.

    *i guess i am on the left

  • THartill (unverified)
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    CGI

    "well do you think bush's 'free speech zones' are 'free speech'"

    Hey wait a minute! You stole that from a post of mine on Dkos!:-)

    Suzii

    but I'd hate to agree with somebody who thinks a dollar buys 12% more than it did last year.

    I think you mean buys less?

    Anyways, it depends on which economic theory you follow. I am closer to Von Mises, who thinks that the only measure of inflation is the % increase in the money supply. (And the increase of money supply is also dictionary Def. of inflation.) This means that one would also include asset inflation in the "inflation index". Which if you have followed the economy for the last decade or so, one would see that major assest inflation occured with the tech bubble and now the housing bubble. IMHO that is where the "missing" inflation is going.

  • THartill (unverified)
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    really? i don't think i did. i've been using that line for a while now (here's another example from february).

    if i did. it was unconscious, and only happened because it's an apt comparision.

  • Brandon Rhodes (unverified)
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    Price gauging is a myth. This is called supply and demand. When supplies are tight, prices go up.

    The fact is, there is no spare capacity in oil production, globally. We're at the global plateau or peak in it's production.

    Check out the outstanding, judiciously fact-checking energy blog, The Oil Drum's recent press release about the reality of what's going on behind the pump prices here. While the CEOs are scoundrels, thinking that their greed is behind gas hikes is to deny the reality that geology has given us: peak oil.

  • LT (unverified)
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    The CEOs are scoundrels and there should be an active effort (like the one that a shareholder has launched in one of the companies, but also talked about on political campaigns) to ask why the CEOs should earn that much money. Exactly what do they do to earn such money, or is it "what the market will bear"?

    It might not have any effect on the price of gas.

    But read the history of 100 years ago (or any of a number of books like those by Kevin Phillips) and you will find that such a large gap between the top company executives and the ordinary working folk doesn't last forever. Karl Rove's hero Mark Hanna was big on rich people getting richer. But then when Teddy Roosevelt became president, we started to see government regulation of companies and corporations.

    If the financial system doesn't regulate CEO excesses, the political system just might. There are several serious reports of Republicans worried they will lose the House in November. And if they do, investigations and oversight hearings (not to mention the end of tax breaks and subsidies) will make those CEOs wish for the good old days when Republicans were in control.

    Why is symbolism dandy when Republicans use it but frowned upon or called "no answer" when Democrats are upset about something?

  • Colorless Green THartill (unverified)
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    Hay now! My name seems to appear on your post!

    I stand corrected, you used it before I did, although that is funny that we both use it, great minds and all that jazz??

    Amen Brandon! It's time to face the facts, even our energy Sect. said today that the cause of high prices is demand is higher than supply. Although he also claimed that this will only happen for the next 3 years, then "oil companies will be in a postion to increase supply" it's like Wha....?

    I don't know what is more amazing, him admiting that there is not enough supply for THE NEXT 3 YEARS or that all this oil will magically appear in 3 years...WTF?

    Quite a pickle we are in here.

  • Karl (unverified)
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    What difference does it make whether it's gouging or supply and demand? It's still another $50 a week or so coming out of the average driving family's budget and going directly to the oil companies. It gets sucked right out of the local economy. It no longer helps support our neighbors. We need a windfall profits tax to increase services a put some of that money back in the economy.

    The right way to have higher gas prices woud be to tax it higher and use the money to fund more public transport and alternative energy developement.

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    The Supply and Demand argument is as silly and dishonest as it is predictable.

    Some bimbette financial reporter even got Jon Stewart on this one last week. Here's a link from an old Wyden PDF from 2001 explaining one example of Crony Capitalism for the terminally clueless.

    When suppliers are allowed to collude to limit the supply of oil (OPEC et.al.)or the supply of refined fuel (the oil companies)that's called monopoly. Yeah, that game you learned in the second grade.....

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    For those among us that suffer from attention deficit disorder, these bastards have been doing this for decades. They've variously patted themselves on the back for their brilliance in limiting supply, or blamed the lack of supply on those danged enviros, as circumstances demand.

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    And yeah, I'm aware that the long term upward trend has little to do with all of this, as there are huge increases on long term demand globally. That has little to do with spikes designed to maximize profits during summer vacation season or winter "heat your house" season.

  • THartill (unverified)
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    Why does everyone talk of windfall taxes? No one can prove that this will raise prices or increase tax revenue. Futhermore, the tax loop of first giving the oil companies tax breaks, cash and other subsidies and then "windfall tax em", is absurd.

    Do most liberals just not realize this happens or do they just ignore it? Seriously, I want to know.

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