Oil Refineries Have Been Price Gouging Like Crazy!

This articles has been reposted from Gas2.

“For 20 years, the rule of thumb was that if you made $5 a barrel east of the Rockies, that was a good profit for a refinery,” says Tom Kloza, chief oil analyst at the Oil Price Information Service. Tom’s company exists solely to track energy markets, and what he found should enrage pretty much everyone. Over the past 2 years, Tom “saw a period in the Midwest where refiners were making $40, or $50, or even $60 on a barrel on gasoline.”

That’s right kids, since gas prices peaked in 2008, the cost of oil has gone down sharply. More to the point, the cost to manufacturers â€" the cost of getting fuel to you, the consumer, has gone way down … but many Americans “haven’t seen a corresponding decrease in gasoline prices.” This is happening, in a recession, even as record windfall profits flow to BP, Koch Industries Inc. and other large, Midwestern oil refiners.

According to industry experts, the correlation between the price of oil, the cost to produce gasoline, and the retail price of gas at the pump has become so utterly f***ing wonky (that’s a scientific term, by the way) that it calls into question one of the central benefits touted by those “Drill, baby! Drill” retards supporters of the Keystone XL pipeline: that the project would lower American gas prices by providing Gulf Coast refiners with a steady flow of cheaper oil from Canada.

Insert profanity-laced rant about Big Oil, the Koch Brothers, BP, etc. etc. (Sorry Jo, â€" Ed)

This price gouging is most evident in the Midwest, where “we’ve had crazy up and we’ve had crazy down” said Kloza. “Everything we’ve seen so far in 2013 in the Midwest has had nothing to do with crude. It’s had nothing to do with Keystone.”

Here’s an industry analyst â€" another industry analyst, I should say, that says the Keystone pipeline’s proliferation of dirty oil won’t lower prices.

What about my claims of oil refinery price gouging? Wikipedia (hardly an authority, I know â€" but just go with it) defines Price Gouging as “a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters.” Let’s see how this stacks up, shall we?

Criteria 1: CHECK!
A situation in which a seller prices goods or commodities much higher than is considered reasonable or fair? We have an 800-1000% more profits than historical norms leading to unprecedented record profits

Criteria 2: CHECK!
A rapid increase in prices occurs after a demand or supply shock? Gas prices shot up during the 2008 summer spike (which was caused by a spike in oil prices), but didn’t follow production costs (supply) back down.

Looks like we’ve got price gouging! All we need to do now is find some noble attorneys willing to sue these oil refining bastards back to the stone age or â€" better yet! â€" skip their bulls*** entirely and just use ethanol.

Yeah, I like that one.

PS: Big Oil is the Devil.

Sources: Oil Price Information Service, via Philly.com and Inside Climate News.

Jo Borrás (42 Posts)

I've been involved in motorsports and tuning since 1997, and write for a number of blogs in the Important Media network. You can find me on Twitter, Skype (jo.borras) or Google+.