Gee whiz, everybody is talking about the price of oil, the price of gas at the pump, and how we're all helpless in the hands of foreign oil producers.
Here's a comment I made over on the NYT Green Blogs
#1. When they tell you, "Sorry, but this is simply too complex for untrained people to understand." - they are lying. If you managed a B in 5th Grade addition and subtraction, you CAN understand it.
#2. When Joe Sixpack looks at the prices at the gas station, and says, "That just doesn't make sense." he is 100% correct, and he only got a C+ in 5th Grade.
#3. When Big Oil reports record profits - of billions - and they say "Look, we couldn't help it, these prices are set by the international markets-" they are lying.
#4 Could Big Oil cut the prices they charge the gas stations - and still make exactly the same profits they did last quarter? Why, yes, they could.
#5. But they don't.
Of course, immediately after I hit the "post" button, a few more occurred to me...
#6. Does that mean Big Oil is ripping off the public - and they know it? Yes, it does.
#7. Does that mean Joe Sixpack's Aunt Ruth, the retired, pensionless, Kindergarten teacher, will finally go bankrupt, fail to pay her mortgage, become homeless, and die of exposure on the street? Yes, it does.
#8. Does that mean that when Aunt Ruth's bank can't sell her foreclosed house, loses money and gets sold to Bank of America for 10¢ on the dollar, and there is no one in town who will loan money to local businesses, some of them will have to close? Why, yes, it does.
#9. Wouldn't the Homeland Security Administration consider anyone causing such widespread economic damage as a threat to National Security, guilty of murder, and possibly guilty of Treason? Only if they're not a large multinational corporation.
Ok, yes, I have this bad habit of thinking that something obvious to me is of course obvious to everyone. Yes, that makes me an idiot.
As first commenter Eric pointed out; maybe it's not instantly obvious. So here was my answer to him; this is the simple math:
Here's how! Remember - it's their PROFIT that is UP. Are they making ENOUGH profit already? They certainly said so in their last stockholder's letter. They make more, automatically, because they've rigged it so their profits are figured as a PERCENTAGE of the price. Price goes up; profits go up. Making the exact same profit wouldn't hurt them a tiny bit.
And- seriously - do businesses have an ethical responsibility to NOT HURT their customers? Every business ethics class in the world would say so. Are their customers being hurt? Ask them. Millions have had to quit marginal jobs because they can no longer afford the commute; I know some of them; some of them have had to quit working for me.
Here's the math (I'm making these numbers up):
Overhead costs $80/bbl. Profits are figured in automatically at, say 20% of that; $16, so cost at the pump is now $96/bbl.
Ok; so; the price goes to $100/bb. Now, the automatic profit margin is $20. Price at the pump; now $120/bbl. And their PROFITS just jumped from $16 to $20, on every barrel.
Exactly what did they do to EARN an increased profit? Not one damn thing. But they still take more money out of YOUR pocket; and put it into theirs.
Could they??? Gosh?? Just continue to harvest a profit of $16/barrel? Yes, the cost at the pump would still go up. To $116/bbl. Yes, it would still hurt me, and my workers; but just a little less. Maybe Aunt Martha could squeak by.
nah. why bother?