Wednesday, March 15, 2006

Congress trying to beat "Big Oil" into submission again

Did we just go through this two months ago? Why is Congress rehashing the same crap over and over? It's a waste of time...

Spearheading the attack on the industry was the committee's chairman, Sen. Arlen Specter (R-Pa.), who called the hearing to examine evidence that the spate of mergers among major firms in recent years was leading to price gouging and other collusive behavior. He said there was a strong correlation between soaring fuel costs and "a phenomenal rise in the concentration of oil and gas companies" and warned the executives that bipartisan support was building for an antitrust bill he has drafted. The bill would make it illegal to withhold fuel from the market in an attempt to lift prices, and it would also impose new limits on oil mergers.

Anti-Trust laws are good; don't get me wrong. But the CEOs make a good counterpoint.

"With respect to the committee's central question, whether mergers and acquisitions in our industry have contributed to higher prices at the pump, the answer is no," Tillerson said. Along with others, he maintained that only enormous firms can mobilize the billions of dollars and take the risks necessary to explore for oil and extract it from deep-sea and remote locations. "For a company to succeed in this industry, naturally it needs sufficient scale," Tillerson said, noting that for all its size, even Exxon Mobil controls only about 3 percent of global oil production, much of which is under the thumb of state-owned petroleum companies in countries such as Saudi Arabia and Russia.

Backing much of the oil companies' case was Severin Borenstein, an energy expert at the University of California at Berkeley. He pointed out that of the current $1.66 a gallon wholesale price for gasoline -- the price before the costs of distribution and retailing are added -- $1.43 could be attributed to crude oil costs, with the margin for refining totaling just 23 cents. He said that, as a result, "only a few cents" of gasoline prices can be blamed on market concentration among refiners and that attacking that problem would not change fuel prices much. But concentration had reached the point where limits on future combinations ought to be considered, he added.

Thank you. And since I'm sick and tired of repeating myself here, see my previous post on the worst record-breaking profits in history. Sure the consumer's paying a lot for gas, but over 40% of that is set by the price of oil (can you say OPEC?), nearly a third is US taxes (varies depending on your state), and the remaining quarter is shared between refining costs, marketing and finally profits. The profit, in percentage form, comes to 9.78%. The average consumer makes more on the house's equity. Apple and Telecom companies make more than that. Why doesn't Congress drag Apple in and start slamming them for monopolizing the market and making such outrageous profits with their iPods? Surely Microsoft, IBM, Dell, and HP deserve the field levelled for them, no? Surely the consumer would benefit, but that defeats the whole purpose of a capitalist, free market society. Microsoft, IBM, Dell, and HP are behind the curve Apple set with the iPod. Don't worry they'll catch up or they'll go under. That's how capitalism works. The person with the best idea for the best price makes money.

Commons sense, people. Get some. Then give some to your Senators. Please.