OK, Gang, now I'll chime in.
Because they were crooked at Enron does not mean all the oil companies
are crooked. That is very flawed logic. What happened at Enron has
absolutely nothing to do with oil companies. My understanding is that
the Enron crooks went as far as setting up fake energy trading floors
(like a futures exchange) to fake out investors/visitors who came by to
see what their money was doing. As soon as the investors left the
premises, the fake oil/energy traders went back to their actual jobs. No
actual energy trading was done.
Oil companies, on the other hand, spend hundreds of millions of dollars
drilling for new supplies (mostly producing dry holes with no oil),
building oil platforms (like them or hate them), and finding new ways of
pulling oil out of depleted fields. It's a risky business and money is
lost and people are killed every year doing it. If you just plain hate
corporations (which are comprised of people, nothing more or less),
that's another issue and you can work that out yourselves.
For someone to take the financial and human risks involved in bringing
up and refining oil, there had better be some serious potential rewards
for doing it or else the job won't get done. That's called profit vs
risk and is what makes our system work, and not just in the oil
business. The implication of a lot of griping about gas prices is that
if only the government would take over, or prices were controlled by law
and not the market, everything would be good. Wrong. Wherever
governments control the oil business, it doesn't work (take a look at
Mexico with a government monopoly). Price and distribution controls are
no better. Remember the gas lines of Jimmy Carter years? Caused largely
by the giovernment refusing to let gas be shipped from states with an
excess, to states with a deficit, because of the different fuel
standards and other flawed reasoning. When you get bureaucrats trying to
run businesses, trouble results.
Looking at gas prices, I also remember filling up my new 1967 Alpine
with 100 octane for around 30 cents a gallon (in 1967). A new Alpine
could be bought for around $2600, a Tiger for $3600. What would a brand
new Tiger cost today, with all the modern safety requirements in there?
$36,000 maybe? So, take that 29 cents a gallon 1967 fuel, add inflation
and the boatload of regulations now required to produce gasoline,
multiply x 10 and you're way over $3.00. Cut that calculation in half
(5 times inflation+ new regulations), and you're pretty close to what
we're paying for fuel today.
There are numerous other factors involved, like instability in oil
producing regions (Nigeria, Venezuela, the Middle East) that effect the
oil futures market and supplies. Do you realize there is serious unrest
in Venezuela now, which supplies arount 30% of our oil. with a
repressive leader trying to turn the country into another Cuba, and this
also pushes prices upward? Check out fuel prices in Europe (where gas is
taxed even higher than here) and you'll be pretty cool with $2.00 a
gallon here.
There are a lot of different factors to consider.
Steve Sage
1966 MK1A
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