When oil was $30 a barrel (way back in 2003—when dinosaurs still roamed the earth) gas was $1.52 (avg), and ExxonMobil Corp. (XOM) made $21b in profits on $246b in sales—not too shabby!
So since they were doing OK financially, we can assume they knew what they were doing price-wise and, as an “integrated oil company,” they were able to process that oil and deliver it right to your gas tank all under one great corporate umbrella. The same corporate umbrella, by the way, that the Supreme Court of 1911 dissolved into 34 companies in order to protect the American people from this sort of price gouging.
Now I’m not going to pretend to know all of Exxon’s costs, but obviously they were able to refine and deliver oil for a nice profit by charging you just $1.52 a gallon. We do know that a barrel of oil in 2003 cost an average of $28, and there are 42 gallons in a barrel, so that’s $0.66 per gallon that we will say is something they can’t control (forgetting the fact that they own or lease the land, the equipment, the people and the production facilities that get oil out of the ground for an average of $8 per barrel).
Now here’s where I’ll start going slow so our legislators can follow. If oil, the main ingredient in gasoline, cost $0.66, and gasoline can be profitably delivered for $1.52, then that means all of Exxon’s costs were less than $0.86. In fact, that $0.86 they charged included an operating income (pre-tax) of $32b, or 13%.
That profit, by the way, is after paying salaries. Take Lee Raymond, the ex-CEO for example. He was paid an average of '$50m a year for running Exxon, but, when it came time to retire, all the company could do for him was give him a check for $140m—not even a gold watch!
Now when oil goes up to $64 a barrel, like it is today, and Exxon, Chevron Corp. (CVX), ConocoPhillips (COP), BP PLC (BP) testify and swear (oh sorry, they refused to be sworn in) to you that gas prices are not their fault, ask this very simple question:
When oil costs $0.66 a gallon, you add $0.86 and gas is $1.52. But now oil is $1.52 a gallon, and gas is selling for $2.60. Did refining and distribution costs increase to $1.08?
The truthful answer is—apparently not. Exxon’s operating income last quarter was $18.5b on $99b in sales, or 18.6%, a 43% increase in margins at the expense of the American consumer.
There is a reason the Supreme Court broke up Standard Oil in 1911; not only is it back together now, but it is part of an oligopoly, a cartel, that controls the lifeblood of this country with virtually no oversight (as the BP debacle clearly demonstrates).
So when you are filling up at the pump this weekend, think about how much you SHOULD be paying for gas versus how much you ARE paying for gas and thank your Congressmen, especially Energy Chairman Senator Stevens of Alaska and our own beloved Vice President Cheney for the excellent work done by his apparently secret energy task force, which first met in 2001, when oil averaged $20 a barrel.
There can be no doubt as to the task force’s effect (even though we are not allowed to know who was on it or what was said), as oil climbed 25% in 2002 to average $25 for the year. Our Vice-President (former Halliburton Co. (HAL) CEO) found this to be unacceptable and sprang into action, reconvening the secret society in 2002.
That must have really done the trick, because oil averaged just $27 in 2003. But by the end of that year we were well on our way to $35, and the rest is history! Having done their jobs to defend Americans right to make a decent living, free from the tyranny of taxes and regulations (providing, of course, you use the broad definition of Americans to include Oil companies, because the rest of us just got screwed), the committee did not seem to feel it necessary to meet again as oil hit $45 and $55 in ’04, $65 and $70 in ’05 and $79 in ’06.
“What’s the big deal?” you might say. “It’s just an extra 20 or 30 cents a gallon.” That’s the beauty of this kind of theft. Like credit card thieves (or credit card companies), they can get away with overcharging tens of millions of people a few dollars each day. It’s not enough for you to complain about, but for them... Well, Exxon earned $10b last quarter alone, more money than they earned in all of 1999 when those pesky democrats were in office!
Even if you don't need the money, don't you think that the extra $292b we are spending on oil every year could be put to better use in other parts of the economy? And that's just America. On a global scale, Cheney and Bush's circle of friends are raking in $1 trillion more per year than they did in 2000—Mission Accomplished for sure!
