Oil Refineries Have Been Price Gouging Like Crazy!

July 11th, 2013 by Jo Borrás

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 — 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, – 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 — 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 – 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 – better yet! – 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.

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Tags: oil price gouging, price gouging, US, US oil, US oil price gougin

About the Author

Jo Borrás 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+.

earlrichards

The financial speculators and oil traders control and manipulate the oil price, the oil markets and the oil supply-chain. Google the “$2.5 Trillion Oil Scam – slideshare” and Google the “Goldman’s, Global Oil Scam.” BP is a partner in ICE and the Koch brothers are “silent partners” in ICE. The US and most of the world are victims of this scam. Plug your Tesla S, electric car into your household, solar array.
Roger

Shame on you Jo Borras!

This article is terrible!

Crude oil right now sells at $106 dollars, a 50% increase compared to last year. That’s stupifyingly high and Mister Jo Borras here is saying that since 2008 the cost of oil has gone down sharply.

The price of crude oil has been at one time in 2008 been 140+, but that was after a 1990-2003 period where $22-28 barrel was mandated by OPEC.
And back then I recall reading that even the $22-28 range was seen as price gouging.
During 2008, crude oil went down to $55 or so and is now climbing up again.

I really wonder where people get the idea that when prices go up it must mean corruption, even when they can’t get around an acknowledge that there’s a good reason prices could never have stayed that low. I’ve seen it before many times.

And stop calling your readers kids Jo Borras, it’s patronizing. And swearing doesn’t make your arguments better nor does calling people retards in a strikethrough or the devil. It actually just makes you look really stupid. Especially when you’re dead wrong.
- RobS
  
  Hey, if it looks like a retard and quacks like a retard….
  - mds
    
    exactly
  - Bob_Wallace
    
    Would you find a different word, please?
    - mds
      
      Point taken. Sorry. No offense intended toward the mentally disabled. The people we’re talking about should know better but they’re twistsed. How about “idiots” …or “epsilon semi-morons”?
      - Bob_Wallace
        
        Yeah. Take it easy on those who can’t do anything about their condition.
        
        Those who are intentionally ignorant? Different story.
      - Volt Owner
        
        Morans! (intentionally ignorant morans)
        ‘Cause even morons can’t help being so stupid.
        
        Probably copyrighted by WB tho…
      - Bob_Wallace
        
        It comes from this picture. This dim bulb was protesting a peace gathering.
      - Volt Owner
        
        Not that that moron would know, but that spelling originated on a Bugs Bunny cartoon, thus my bit about WB…
- mds
  
  Oh, so the oil companies have not been making the world record all-time high profits I’ve been reading about? Must be liberal disinformation. Do they have organizations that sponsor that like the right wing? I haven’t heard of one.
Volt Owner

Gas prices did something? I didn’t notice. I spent $12.80 last year, and $11.80 this year for my yearly 3 gallons, so it looks like it went down to me, is that right?
- http://zacharyshahan.com/ Zachary Shahan
  
  Haha, that’s the way to drive…
Karl-Friedrich Lenz

As someone supporting renewable energy strongly (the point of this site), I have no problem whatsoever with higher gasoline prices. Every bit helps get more electric vehicles on the road.
- http://zacharyshahan.com/ Zachary Shahan
  
  ditto.
  
  (also, a bit of exclamation about the crazy profits of oil companies should help… i think. while also helping EV drivers to yet again appreciate their electric vehicles :D)
- mds
  
  You’re right about that. They are helping to put themselves out of business.
Others

They cannot keep so high for so long as there is a huge choice of fuel efficient vehicles for consumers. Also the Taxis were now moving into Hybrids and CNG.

Electric and Plugin vehicles were accelerating at a faster pace.

Recently Ford reduced the price of Focus EV by $4,000.
Marion Meads

Am buying GM Spark EV. Moves as fast as electricity. As soon as I saved money for solar PV, wouldn’t care much with these greedy fossil diggers that have bottomless appetite for profits. Come on, ye speculators, speculate on this!

Net price of $18K if you live in California, even lower if you live in the Central Valley of California. Zippier than the Volt, Leaf, Honda Fit EV and the focus electric. And priced to liberate you from oil refiners!
- http://zacharyshahan.com/ Zachary Shahan
  
  looks like an awesome car. Happy to post a review once you have it a bit!
Steeple

Written by someone who doesn’t understand that commodity markets are global in nature. If you don’t like it, go ahead and build our own refinery. That’s if you can get all of the necessary approvals, community support. Etc… NIMBY comes with a price.
- RobS
  
  Alternatively if we don’t like it we can buy a perfectly good EV these days and cease needing their goods. The refineries may have had a captive audience until now however their product is rapidly becoming optional, that is a market dynamic they have never had to deal with in the history of modern transportation, will be interesting to see if they simply price themselves out of the market without realising it.
  - Steeple
    
    You are correct. Eventually refining margins will fall back to marginal costs as the shale crude gets placed and gasoline demand continues to fall. Then we’ll see more refinery closures like we have over the past 30 years until the market brings itself back into balance again.
    
    What drives me crazy is hearing a rant from our author about how much $ refineries are making when I suspect he would not have been much of a fan of allowing refinery capacity expansions that would have mitigated this potential.
    - mds
      
      More rants over oil gouging and less rants over subsidies/incentives for alternative renewable energies, EVs, and PHEVs! Just say’in the later is dumber than the former. These oil companies are still raking it in from USA federal government tax breaks and loop holes.
      - Volt Owner
        
        Did you mean to say the former is dumber than the later?
      - mds
        
        Yes, ranting against subsidies for renewables is dumber that ranting about subsidies for fossil fuels. We should be ranting about subsidies going to fossil fuels, not those going to renewables. Those who claim to be libertarians against all subsidies should be speaking and working to stop the largest dollar subsidies first, the fossil fuel subsides. Those like Steeple, who speak out against subsidies for solar and wind, but fail to mention the larger fossil fuel subsidies are frauds and hypocrites.
- mds
  
  This from the troll who recommends we remove all subsidies from solar, wind and all renewable energy, but fails to mention any problem with the larger dollar amount of subsidies and similar tax break benefits going to these gougers. Yeah sure and they aren’t exporting any refinery products either are they?
  Clueless ultra-right winger.
  The problem is we’re subsidizing them to increase their production and sales to a world market, a world market were our small increases in supply are not making a significant dent in oil prices. The answer is to encourage the development of renewables and move over to those instead, including the use of EVs and PHEVs.
  NIMBY? Do you have any idea the level of pollution allowed for refineries in Louisiana all these years? No, probably not. How about that Exxon Valdez and Gulf oil spill? How about the recent pipeline spill and train wreck. Neat stuff in your back yard eh? You must long for the good old days of flammable rivers. Go live in China. They think big business is more important than a tolerable living environment, like you do.
  Renewables, EVs, and PHEVs are the better solution. Take your stinking oil and your philosophy of unbridled capitalism and go mess up some other country, not ours. …better yet, move to Venus it’s already intolerably hot. You probably think plants will grow better there.
  grrrr Thanks, I needed that.
  - Steeple
    
    Glad that you feel better.
    
    The fact of the matter is that oil has powered Western economies for the past 100 years. Has it had a perfect track record? Of course not. Has the safety and environmental performance of the oil companies markedly improved over the past 40 years? Of course it has.
    
    By the way, I’ve already replied about my opposition to all forms of energy subsidies. Friendly reminder.
    
    If EVs et al are better solutions, I welcome that. We all want what’s best for our economy. I would just prefer that the wisdom of crowds via the market prevail over the purported wisdom of our DC shamans.
    - Bob_Wallace
      
      Your ideas of how our government should work would be worth considering if our markets were driven by more than short term gain.
      - Steeple
        
        Bob, I hear you. But as a wise man once told me, the long term is composed of a series of sort terms. If you don’t win the short terms, you can’t win the long term. Kind of like NBA coaches teaching their teams to win the quarters in order to win a game.
      - Bob_Wallace
        
        You’re simply underlining the reason that we need ample government involvement in the market.
        
        Concentrate only on winning quarters and you may not build in the endurance to play four and overtime.
      - mds
        
        …which is why I’m in favor of Obama’s “all of the above” approach, but I’m also in favor of reducing benefits to these highly profitable companies by billions, as Obama has suggested and failed to do several times. There is waaaayyy to much big money corrupting our politics and causing major tax dollars to be given to these large corporations that to not need or deserve it. (Thank you supreme court dirt bags.)
        We cannot continue to improve and convert to renewables if we kill the current fossil fuel based economy …so yes the short term has importance too, BUT you must have a long term plan or series of short term plans can lead to a dead end and you are dead or impoverished. The ant and the grasshopper dude! You are in favor on unfettered capitalism until it leads to an Easter Island result, lame.
        Additional federal funds to fossil fuels companies is charity to the rich. Additional federal funds as incentives to solar, wind, other renewables, EVs, and PHEVs are working and are the answer to how more of us can live reasonably well on this island. Wake-up your brain! Think outside of the dogma! See what is actually happening! Oil is getting expensive, with only minor and temporary drops. We are now exporting more oil and it remains over $100 a barrel. Solar, Wind, EVs, PHEVs, and energy storage are all getting cheaper. Now… where to invest money…? I know invest in oil, because we can control the politics and force the commoners to buy this at high price margins. Rant against this. Vote against this. …and for the sake of our country in the future get those fat beggars off of the federal tit!!! They are already making enough money. Sorry, I’m outraged at the continued charity to the rich. Guess I’m just funny that way.
    - Volt Owner
      
      Ah here it is. Another “free market” advocate with something in their eyes…
      
      “Wisdom of crowds” WTF???
      
      You’re saying that Kristallnacht was a free market decision by a benevolent crowd?
      
      The “invisible hand” has had a whole lot more than a thumb on the scales for decades…
      - Steeple
        
        If you like to read books, you might enjoy this one
        
        http://www.amazon.com/The-Wisdom-Crowds-James-Surowiecki/dp/0385721706
      - mds
        
        Good view. Just stick with that. We are already at the tipping point. A significant few are beginning the change their views away from the fossil fuel bs and over to the renewables solutions. Witness the state wins over moneyed attacks on renewable energy mandates and the defeat of Faux News when deriding the GM Volt. Check the price trends. The general public is already beginning to understand renewables solutions ARE going to be better for their wallet. They already are in some cases. That is where we are going.
        Now… this would be a lot less painful if we did not have so much money from the establish fossil fuel empire going into influencing our politics away from doing what the public wants and providing dis-information including inoculating people with false dogmas… like renewables would do better if they had to stand on their own. (At the end of this decade fine, BUT NOT YET! I WANT THEM GROWING FASTER FIRST! The best time, the most cost effective time, to get them growing faster is at the beginning. Obama and others have done this! Keep it rolling!)
    - mds
      
      “By the way, I’ve already replied about my opposition to all forms of energy subsidies.” Nonsense, you only ever complain about energy subsidies for renewables. (As you have just done again with ref to EVs this time.) An unfriendly reminder. If you’re going to dish it out, then expect it to come back and don’t try to hide behind “friendly”. Polite people with unfair and unreasonable agendas, are not good people, even if they hide behind good etiquette. I prefer a little rudeness coming from those trying to do right. …and I do feel better.
      - Steeple
        
        Ok, let’s try this.
        
        I have asked my congressman to introduce the SMS Act of 2013; the Steeple Moon Shot Act. I want to go to the moon, and I want others to pay for it. Write to your congressman too and perhaps you can go along too!
        
        I know that you would like a pat on the head for saving the world, and all of the Chinese who are burning coal and cow dung in order to have a good life are very appreciative of your efforts.
        
        So you want to beat Big Oil? Good for you. Here are two different ways to get there.
        
        One way is to call your big brother who has weally big muscles, the one in DC, and perhaps he can go punch Big Oil and win your fight for you. You’ll look like a weenie, but you won and that’s all that matters, right? Kind of like when the Big 3 automakers bought up all of the street car companies and closed them down.
        
        Or you could take the high road and fight the battle by winning on merit. Produce products that are more competitive. Kind of like Apple vs Microsoft, cellphones vs landlines, etc… And who doesn’t love it when David slays Goliath. Probably would feel like a better win too.
        
        So take your pick. By the way, America was built primarily using the second method.
      - Bob_Wallace
        
        Read some history, Steeple. Read up on things like the transcontinental railroad, electric grid, paved roads, air travel.
        
        I recognize that libertarians believe that they built the hospital they were born in and paved the roads they rode home on. But most of us live in the real world. We can recognize what others have contributed to our lives. Even Republicans largely get that.
        
        I think we’re going to have to win the war with fossil fuels largely by innovation because the fossil fuel industry has enough money to influence an adequate number of legislators needed to protect their profits.
        
        We’re winning.
      - Steeple
        
        Bob, we’re all on the same team.
        
        I would love to see the day where we are getting most of our power from renewable sources, and where we can use our natural gas as a motor fuel instead of simply burning it for power. And where we have widespread installation of energy efficient LED lighting and the like.
      - mds
        
        Renewables solutions are winning more and more by the high road. We would not be here without help: Carter’s incentives and foresight, Germany’s huge contribution, more recently Obama’s incentive and loans, China’s incentives, and others.
        Yes, I got my moon shot with Obama and it cost far far less than you imply by calling it a moon shot. It cost far, far less than the Gulf wars, Afghanistan, Iraq, the effect of the trade deficit on our economy, the effect of high oil prices on our economy, the Gulf oil spill, the health effects of coal, and on.
        I got my moon shot and you can just suck it up, because your moon shot isn’t a moon shot toward a solution at all, it’s just the same old thing that’s not working …and the cost is killing the country …@#$(&@.
        I voted and I’ve seen somebody with a brain in the white house for a change. Now we have an unstoppable level of development for wind, solar, EVs, and PHEVs. Energy storage is right behind them and reduced electricity use from conservation and LED lights is already here. If goofballs like you could figure it out and get out of the way, then we could progress toward a solution faster.
      - Steeple
        
        Bet I have more LED lights installed in my home than you do, champ
      - mds
        
        Let’s make this simpler. Using your example Steeple, it’s both you overly-dogmatic ninny! I’m going to do my best to talk my big brother into fighting for me instead of for big oil AND I’m going to do my best to provide a better, more economical solution. The later wins in the long run. The former helps you get there faster.
        For the record: I don’t want to punch anyone in the nose. Revenge is pointless and the fossil fuels industry has served us all admirably for a over a century, as you say. I am fighting against their current perpetuation of false information, unfair and immoral influence over our government, and the resulting theft from the public coffers. You are ok with this and don’t think renewables should get anything from the public coffers even though this will clearly benefit us all. Your view is warped. It is the view of too many. I challenge that view.
        The big oil and coal execs are making a mistake, as a few smarter than you point out. Fossil fuels is not going to win this fight, and yes it is a fight. They should be using their great wealth to invest in the alternatives that are going to win. They are trapped by their own greed:
        “There is no warmth to be found amongst those afraid of losing their ground.” THAT is why it’s a fight. Figure it out and pick a side ….but by default you already have.
  - Volt Owner
    
    “Wisdom of crowds” WTF???
    
    You’re saying that Kristallnacht was a free market decision by a benevolent crowd?
    
    The invisible hand has had a whole lot more than a thumb on the scales for decades…
    - mds
      
      yep