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gas prices
The dramatic rises in the price of gasoline at the pump have caused many working people to question what’s going on. Why is has the price of gas almost doubled in such a short span of time?
The oil industry has stated that the causes of the price hikes are 1) increased demand for gasoline due to SUV use, 2) rises in the price of crude oil, 3) several fires and other accidents at misc. oil/gas refineries, and 4) EPA regulations. In fact everywhere you turn, from the evening news to the daily newspapers, big oil is doing all it can to sell you these various explanations.
Socialist Action however was skeptical. Our skepticism came from our knowing that from its inception the oil industry has proven its willingness to lie, cheat, steal and even spark wars to increase its profit margins. A cursory investigation has confirmed our suspicion. We found holes in all of the above mentioned explanations. 1) We found that instead of rising, with the exception of the regular rise in gas consumption that happens every summer, consumer demand for gas has fallen 460,000 barrels a day – yet prices are continuing to skyrocket. 2) We found that while the price of crude oil has gone up, it is only 5% higher in 2001 than in 2000. This in no way then explains the huge rise in prices. 3) While there have been several oil refinery fires recently (such as the one at the Citgo refinery in Lemont, Illinois), the rate of fires and lost production is not out of the ordinary. And on top if that, a number of energy and oil workers (such as Barry Sheppard in California) have come forward explaining that the plants they work at sometimes consciously decrease production up to 25% for “maintenance” reasons in order to create these so called shortages. 4) And finally, while EPA regulations and state and federal taxes do represent a percentage of the price you pay at the pump, it’s not a percentage that has risen more than marginally recently, and in fact only amounts to about 23 cents a gallon in Wisconsin (and is similar in MN and MI).
What then is causing the price increases? We attempted to put together a breakdown of the price of a gallon of gas. Currently a barrel of crude oil costs about $30, which represents about 71 cents a gallon. We already established that taxes run up another 23 cents. The amount added by gas stations is estimated to be around only .04 percent, leaving refining & distribution as the only other major element to figure out. We were shocked though by how much refining cost estimates varied. The Department of Energy listed it as averaging 15% of prices. The Energy Information Administration listed it as 26% (noting that it was only 14% in 2000). A study by the state of California found the cost to be equal to that of crude oil, which is two – three times higher than the figure issued by the Dept. of Energy. Something fishy is going on here!
In summary it is the view of Socialist Action that what is taking place here is nothing more than old fashioned greedy price fixing. The big oil cartels are consciously jacking up prices to the highest level they can get away with. In some cities the price of gasoline jumps 20 cents a gallon overnight simultaneously at every gas station in town! This can’t be explained away by SUV use or a fire at a Citgo refinery in Illinois!
The greatest crime is that these price hikes hit hardest those who can least afford it. While there are some who hope that rising gas prices will lead Americans to consume less gas and rely less on automobiles for transportation, we recognize that the reality is alternative means of transportation are not viable options for the average worker. In fact in many parts of the nation, including much of the Northland, public transportation doesn’t even exist. That means we have to rely on our automobiles to get to work, get our children to school, and do all the other things we have to do in our lives. And with the ever-increasing attacks on our livelihoods, we can ill afford to be gouged at the pump. This is why what Big Oil is doing is such a crime. We demand that Big Oil be held accountable, and be made to pay for the crimes it is committing!
The text above is from a flier issued by Lake Superior Socialist Action & Youth for Socialist Action.
