The big oil companies are ripping us off. I am not saying that the oil companies are responsible for the run-up in the price of oil. As a recent article in The Herald explained, speculators have driven up the price of oil. (March 25, “What’s really going on with gas prices.”) There is very little you and I, the president or the oil companies can do to reduce the price of oil. But the oil companies are taking advantage of the high oil price to fleece motorists.
Almost all businesses have their profits squeezed when the price of their supplies goes up. If they try to pass this price increase on to their customers, some customers may stop buying their product or service. But this doesn’t occur with the oil companies. They aren’t like other businesses. When the price of oil goes up, they not only pass on this increased cost, they raise their gasoline prices even more to maintain the same profit margin, the ratio of profit to revenue. Revenue goes up, so profits go up, even though they are refining and selling the same amount of gasoline. It seems to happen every time — when gas prices peak oil companies report record profits. I bet they’ll have record profits again this spring and summer, too.
We can’t fight back by going to a different gas station, or not buying gas on Tuesdays. Driving less only helps a little bit. What we can do is pay attention to which members of Congress do the bidding of the oil companies, including retaining the special tax breaks the oil companies enjoy. Congress is reviewing these tax breaks again right now. Note which political party supports the oil companies, and vote for members of the other party in the next election.