So in the recent ExxonMobil thread, I saw many come out and defend the oil companies from accusations of price-fixing.
Some comments in that thread which dispute price-fixing are shown below...
* "If indeed ExxonMobil is involved in some dramatic price-fixing conspiracy, they should be embarrassed by making only 10% margin on their nefarious activities. "
* "Not only that ****, I'd be doubly embarrassed if it took a corporation 100 years to figure out how to start "fleecing" the consumer. "
* "But "the barons" can't directly set the price (please see my previous post on the topic or go do some more reading on how commodity markets work). They can play around with the supply and try to affect the trading price in that way, but this is simply validation that oil prices are set by supply and demand, doesn't it? "

We all know what fuel prices are doing to our car/truck industry, and even manufacturing and consumer retail (as it takes fuel to heat homes, businesses, furnaces, and even move goods to a retail store, etc.)

Some feel that price-fixing is not happening... some do.
So let's poll it up.

In the mean time, I wanted to post an article I crossed this morning at break while scanning the national news...
Ex-natgas traders guilty of price manipulation
"Three former El Paso Corp natural gas traders were convicted on Thursday of reporting false deals to manipulate gas prices from 2000 to 2002.
A U.S. federal court jury convicted James Brooks, Wesley Walton and James Patrick Phillips of sending publications Inside FERC and NGI false trade data to defraud the markets."
"There will be an appeal. We think there are several issues," said attorney David Adler, who represented Phillips.

Brooks, who was the boss of the trading operation, was convicted on 45 of 49 counts in the indictment, trader Walton 23 counts and trader Phillips 21."

Hmmm... 45+23+21=89 individual counts convicted between 3 guys.
Yup... probably just a fluke. Accident. They didn't mean it. Appeal should clear everything all up.

NOW GRANTED - the article above does not implicate anyone from ExxonMobil or any "big" oil companies, but if you think the big kids on the playground don't play like the little kids... well... I challenge that theory. I think the big kids have better systems and are smarter about it, but I personally still believe it goes on. It's just planned better and executed better. The article about the alkylates and controlling production toleverage prices. Even Enron's debacle speaks VOLUMES about how the crystal tower can crumble if one key element changes in the best of systems.

Anyways - this should make for an interesting discusiion.

 

Yes, we all know where you stand on the issue ProudPony.

My question to this is, (and I certainly think it's fair and logical), why have these "price fixing" allegations only come about in the last 6 or 7 years (hmm, coincidentally the same period of time we've seen gasoline well over $2/gallon?)

It would seem to me that people are grasping at straws to blame the "big bad oil companies", or that the oil execs have only very recently figured out how to rip us all off (apparently they didn't know how to, when their stocks were in the toilet 20 years ago).....

 

How about an option, "I doubt it, but I wouldn't put it past them."

Am I to assume you're now discrediting the influence of speculators, the many different formulations we have for for gas all over the country, and the skyrocketing enery needs of China, India and former 3rd work countries?

 

Grasping at straws - maybe... I'll concede that they are looking for someone to pin their hardships on for sure.

But maybe the mentality is more like... "stealing" a quarter or two from me is bad, but not worth my time, however "stealing" $20-bills from my pocket each week gets my attention.

We tend to deal with the biggest problems and let the smaller ones go. IMO, the "fleecing" (if we may use that term) has reached a point where it is one of the bigger problems because it is hitting so many people so hard. Health care, insurance, and others are at the top of that list too, but I'm interested in people's take on fuel suppliers in this thread.

 

My opinion, Yes.

 

That's the middle option.

I absolutely HATE the "market analysts" who go public announcing that oil prices went up today because a hurricane 2800 miles away from the Gulf of Mexico has a chance of hitting a refinery in Louisiana in 9 days. Or that a terrorist group in Tajikistan is planning to bomb a pipeline. Pure and utter BS.
Those situations are an every-day occurance, and have been since oil became a valuable commodity. Nothing changes day-to-day.

Likewise with the "spring price surge" we see every year. School's out. People are on Spring Break, etc. All of these happen EVERY YEAR - there is no surprise there. Your typical retailer of goods will simply increase their shelf/stock in anticipation of the increased demand. (Jeebus-Cripes... ever look on the main aisle at Wal-Mart a week before school starts back?!?! Notebook paper out the wazootie, and the price is CHEAPER per pack - not MORE.)
But gas companies prefer to use this as some kind of excuse that demand has surged beyond expected levels so price went up to meet that demand on a fixed supply. It's an intentional lack of preparation to induce the price adjustment... it's planned, and it's orchestrated.
Same goes for the "switch-over from winter to summer blends" excuse.
And the "can't invest in more refineries" excuse.
And the "can't increase efficiency in current refineries" excuse.

I agree 100% that the demand for energy is increasing - especially in Asia and the Middle East. I've been there and seen it first hand. I've posted on it on this website. But the influence that Asia has on our prices is a slow and steady change compared to the $.40/gal rise in 2 weeks from all gas companies because a refinery had to shut down in Texas for maintenance. Oil companies know the demand is growing over there, and they have as much time as any other utility supplier (i.e. water, power, etc) to respond.

We (the public) need to increase the resolution on our BS-detectors and start calling some people out on these knee-jerk fluxuations. And it would not be so hard to handle if the oil companies were not continuously reporting RECORD profits quarter over quarter, year over year.

 

After this was posted in the previous thread on the topic:

...I no longer have anything to fight for

Have fun with this one, kids - maybe I'll stop back in when this rolls over to the third or fourth page of ranting that's not rooting in economics, real-world politics, or geology.

 

The above example of natural gas price-fixing is interesting, but I do not think it can be used as evidence of the same in the oil-based gasoline world. Why? Because we produce 85% of the natural gas that we consume, compared to only about 40% of the oil that we consume. Further, the vast majority of imports come from our neighbor to the North. I just don't see the relevance in this comparison....with the possible exception of to say that anything is possible. That I will agree with.

Source

As for those record profits....I would still go back to margins. Is 10% a record? If it has been relatively constant, then wouldn't it stand to reason that the actual record dollar number is much more related to the actual amount of product sold, and the actual cost to the refiner/distributor to refine/produce/distribute that product?

I'm sorry...I see it primarily as a supply vs demand issue.

Bob

 

Gas is a commodity, supply & demand.

/end

 

http://thomaspainesblog.blogspot.com...dollars-7.html

Don't forget our currency problem.

 

 

Supply/Demand theory is great when anyone can play.

Pencils... staples... belts... business cards... all things that any person in this country can produce themselves, in their own way, with little or no licensing, permitting, or governmental intervention.

BUT - YOU go and try to drill for oil someplace. Especially somewhere that you do not "own" the property, like a national park or out in the open ocean. Permit? License? Insurance? Security?
Simply put - YOU DON'T GET TO PLAY HERE.

Heck, I can easily create my own electricity with a waterwheel or a windmill on my own property with materials I can buy at Lowes or Home Depot. Better yet, the power company HAS to buy any excess power that I generate and do not use! (I'd LOVE to play that one on ExxonMobil)
But ELECTRICITY is regulated and oil is not?!?!
C'mon guys.... you have to at least admit that is a little out of whack, no?

 

I am not (nor can I begin) trying to implicate big oil companies of price fixing with some evidence or comparison. If it were that easy - they'd be busted already.

My intent in the first post was NOT to compare NatGas industry to big oil industry, but instead to point out the bad side of human nature (albeit in an industry VERY closely related to big oil, and in fact shared by all big oil companies).

To me, the point is that big industry tends to fertilize the "seed of greed" that exists in every human. Some control it, while others seem to be unable.

Given the recent developments across all industries from entertainment (ABC/Disney) to industry (Tyco International) to communication (AOL/TimeWarner), energy (Enron) and bazzodles of others... it's d@mn-near impossible not to think that the sector that houses the world's largest monetary turnovers can not be subject to the same bad people with bad judgement.
IMO it's a statistical impossibility.
To me, it's just how many are doing it at what level, and when will somebody FINALLY come forth with the right evidence that takes down a big player.

BTW... a big because I'm in a good mood and not arguing, just prying the door open for good conversation.

 

I wish this poll was public so I could see what the majority of the more known intelligent members were choosing.

I have no educated opinion on this matter myself but I don't want to read this entire thread up to and after this point because it's going to be pages and pages long.

 

Just remember, nobody was hold fund raisers for "Big Oil" when crude was $10/barrel.