The Free Market Price of Gas (Part 2)
(08/23/2006): Having just watched a Senate Commerce Committee
hearing on C-SPAN that took place on 05/23/2006, I wanted to
thank the Committee for holding one of the very few informative
discussions of the the so-called Free Market Price of Gas. It
also very clearly demonstrated FTC complicity in the fleecing of
the American Public.
At the crux of the debate, was a report generated by the FTC
summarizing the FTC's investigation into the so-called price
gouging or price manipulation of gas prices. The hearing
confirmed my previous post that investigating price gouging was
a meaningless gesture and serves a microcosm, for all to see,
that the American Public is facing a constant barrage of
misleading disinformation from our current Administration.
Deborah Majoras, the Chairman of the FTC, was so harshly
criticized over the report, by both sides of the aisle, that she
was reduced to constant head shaking, rolling of the eyes, and
tsk, tsk, tsking!
The Committee clearly identified that the report, in which
Majoras proudly reported, took 1000s of hours of FTC
investigation time, simply addressed the wrong questions.
Furthermore, the FTC failed to investigate the real problems in
which it was fully aware. It was not a surprise, that the report
concluded, that if all oil companies raised their prices, then
no one single company was in violation of any anti-trust law!
It was very clear to me, that Majoras clearly knew that the
question of price gouging was irrelevant, and she actually
displayed immense pride in the fact, that the FTC had been
tasked to investigate this meaningless question.
The truth is, that the price of a barrel of oil is not set by
the free market, it is set by an oil cartel.
The truth is, that
gasoline prices are not determined by the free market, but by
huge vertically integrated companies whom do not need to collude
with each other to raise the price of gasoline.
The truth is, that our oil oligopoly is raising the price of
gasoline by implementing policies of "thin capacity", "just in
time supply lines", and by maintaining refining capacity
reserves less than 1/5 of those required to prevent supply
These policies are directly responsible for creating a unique
business model in which, when the cost of raw materials
increases, profits increase many-fold. No other industry can
claim this remarkable achievement, better described as,
I also wanted to thank Mark Cooper, the Research Director of the
Federation of America for proposing real solutions designed
to break the oligopoly strangle hold. Mr. Cooper suggested that
we take a slice of the current demand and direct it to
alternative energy sources. Thus corn would compete with oil,
and ethanol refineries would compete with gasoline refiners.
I would also like to thank California Senator Barbara Boxer for
her fiery, if not somewhat over the top, scathing criticism of
Deborah Majoras and the FTC for lying about and whitewashing the
Shell Oil's depiction of their need to close their
refinery in Bakersfield. The lack of conscious that is on
display by corporate America is simply disgusting.
The Free Market Price of Gas
(04/25/2006): Yesterday I paid $3.299 per gallon for regular
unleaded gas to fill up my gas tank in Tahoe City. Just 20 days
ago the price per gallon was $2.899. What happened? Apparently a
switch over from
to Ethanol was botched on the east coast, creating shortages on
the east coast. Mind you,
California made this change long ago. In fact, Shell Oil
completely moved out of the Tahoe Basin over this single issue.
So why are Californians and others paying the price? No one,
including our President wants you to know. Time after time, oil
executives have appeared before congress and declared that it is
the free market that determines both the price of oil and the
price at the pump.
Capital really does believe the American people are stupid.
Basic economic theory defines a
free market as a market whereby no single supplier, or a
relatively few group of suppliers can effect the price of a good
or service on their own. In other words, if you make widgets and
raise your prices, the average price of a widget remains
unchanged. The same is true if you stop making widgets, the
average price is unaffected.
If the price of crude and if the price at the pump are really
determined by the free market, then the price at the pump would
have remained unchanged in California. Basic economic theory
goes on to describe other market conditions, that of
An oligopoly is a market place whereby a relatively few
suppliers can and do control both the supply and therefore the
price of a commodity or service. Generally, if 4 suppliers
control 40% or more of a market, then you have, by definition,
an oligopoly. Clearly both crude oil and gasoline are
commodities that fit this description. Suppliers of crude oil
and gasoline do manipulate supply and prices to increase their
It is high time that our President, our congress, and oil
executives stop lying to the American public. Investigations
into price gouging, stopping the flow of oil into our strategic
reserves and passing new laws punishing big oil are meaningless
political gestures. Nothing short of dismantling these
oligopolies will change the pain the American people feel every
time they fill up. The War on the great American middle class
There are a few who realize the truth, the
Democratic Blue Dog Coalition is one such group. They are
staging debate in the house tonight, working through midnight
and can be currently seen live on C-SPAN. Much of tonight's
debate can be viewed at the previously provided link.
United States Representative Debbie Wasserman Schultz
describe the oil companies profits of $34 Billion in 2002, grow
to $113 Billion in 2005,
Congressman Bill Delahunt thoughtfully proclaimed that those
profits were not those of free market companies, but those of
oligopolies bordering on monopolies! Keep it up Blue Dogs, my
heart goes out to you all!
Victory in Iraq • New World Order • Illegal Immigration • Illegal Immigration I • Illegal Immigration II • Free Market Price of Gas • 9/11 Conspiracy Nuts • The Great Conspiracy - 1 • The Great Conspiracy - 2 • Mid Term Elections 2006 • Natural Disasters • Dear Mr. President • The Religion of Peace • Adware/Spyware, the Bad Guys • Lake Tahoe Coal