May 16, 2008
It was more than sticker shock I felt on Tuesday, as the price for a gallon of regular gas hit $3.73 and diesel $4.39. It was more a sense of sheer outrage that the price rose about 75 cents a gallon since February. That’s nearly a 25 percent jump.
I turned to the woman at the pump ahead of me, fueling a white Chevy Tahoe (ouch) and said, “Did you ever believe America would come to this?” She shrugged her shoulders in bewilderment, no help at all. This was war, I thought to myself, them (Big Oil) against us (the America’s people).
Wednesday, the New York Times reported on this war, Oil Refiners See Profits Sink as Consumption Falls. I couldn’t believe my eyes. They said that American refiners were going through a “traumatic period;’” some of them had lost money in the first quarter, and “for virtually all refiners, profits are down sharply.” That is, the price of oil continues to rise because of global demand while amazingly consumption of gas in the United States is actually falling. This as a result of the slow-to-no growth in the economy and drivers actually trying to conserve. Miraculous!
In fact, the International Energy Agency, reported a 300,000 thousand barrel per day (bpd) drop in the “developed world.” But don’t get too happy. This hasn’t brought down the price yet, or even inspired a price war among refiners. Actually, the slack in our usage was sucked up by China, the Middle East, and Russia. So the refiners right now aren’t trying to regain our lost market share. They’re sitting tight, waiting for us to buckle. After all, summer is coming and the driving is supposed to be easy. How are we going to just sit, walk, and run and not drive?
The Times reported that refiners Tesoro, Sunoco and United Refining all posted first quarter losses. Those hardest hit are the small refineries that tend to process the most costly kind of crude oil. They have the most trouble passing their hiked gas costs to customers. Valero, the country’s number one independent refiner, suffered a 76 percent drop in profit from last year at this time, that’s from $1.1 billion to $261 million. That’ll open eyes as mine did on Tuesday.
Nevertheless Exxon, which owns wells and refineries and sells oil, still reported big-time profits as their brothers in the refining businesses were hit with losses. They also know that their imports have surged in recent weeks, say from China stockpiling oil as the Olympic Games approach. Bejing does not want to look “Third Worldly” again with fuel shortages or power outages that troubled the country last year. So, some of my initial excitement about usage-decline here has dimmed, but there’s still hope.
Gas prices guzzle your stimulus check?
In fact, a New York Times Editorial Board blog questioned “Could Gas Eat Your Stimulus Check?” It was duly noted that your piece of the $168 billion “stimulus” package passed earlier this year by Congress and sined by George W. Bush could get eaten up at the pump instead of pumping up the economy. So a few oil companies might sop up the stimulation and the rest of the economy could remain in its Rip Van Winkle sleep, hopefully not for 20 years.
Going back to that lady with the Chevy Tahoe, given that nearly 25 percent jump in gas prices since February, that’s twenty bucks more for a fill-up than three months ago. If she keeps shrugging her shoulders and driving around, she could go through a $600 or more stimulus check pretty fast. So it’s sad to see even the dismal stimulus package stimulating Exxon and its engorged sister oil companies.
Goldman Sachs economists believe gas prices have to rise even more to take the “punch” out of the fiscal package. Of course, remember Treasury Secretary Paulson used to run Goldman Sachs, so they might have a slightly biased point of view. Nevertheless, the Goldman gang says US spending for gas runs $33 billion a month, $400 billion a year. And the new increase will only increase our gas guzzling by $8.25 billion — ah gee, what a break. So, in order for the whole package to be eaten up by big oil, gas prices would have to go up to $7.50 a gallon. Don’t shriek. In England, they’re paying upwards of ten bucks plus a gallon, though they buy in the smaller liter form.
Nevertheless, if there’s anything we’ve learned after nearly eight years of Bush and the Oil Boyz, anything’s possible. For sure, I would count on another bump at the pump, or a steady stream of them. This is a War on the American people by Big Oil and the Bush Boyz. Decreasing consumption is the only real weapon we’ve got — and the voting booth (if that’s not already cranked with corruption). Also, fewer trips to the mall will impact on the entire economy, while putting a whole lot more money in consumer pockets, where it belongs. Unfortunately, it might add to the rise in unemployment rolls.
Bottom line, whoever the next president is, he or she will inherit the Pump War as well as the Iraq War. Of course the trillions we spent in Iraq could ironically have helped us come up with an alternative energy source to avoid the Pump War. So let the presidential hopefuls think twice about what their energy policy will be — how they will regulate Big Oil prices, how much they will allocate in funds immediately for a comprehensive search to develop alternative energy sources, how they will stop this free market transfer of wealth from the working and middle classes to the filthy rich oil barons of Texas and the world.
And don’t just shrug your shoulders, lady, or sir; it is your wallet they’re going after. After that, your lunch, your house, your digital TV. Name it.
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