When market prices don’t work

Posted on January 28, 2006 by Gene

Told ya so. This is how the price gouging system works. First, you raise your price higher and higher until people are shaken out of their inertia and begin to complain. Then, you bring it back down just far enough that they breathe a sigh of relief — but not down to where it began. Keep doing this periodically and eventually you’ll be selling gas for $3.00 a gallon and people will not only pay it willingly, they’ll be thankful that they’re not paying $3.50. Until 8 months later, when that’s what they are paying. All the while, the big oil companies are raking in obscene profits. And you and I can no longer afford anything because the price of oil drives up all other prices.

The annual record when adjusted for inflation is $2.50 a gallon, set in 1981, courtesy of the Arab oil embargo. Last year’s $2.47 average was the third-most-expensive year, according to the California Energy Commission, mainly driven up after Labor Day after Hurricane Katrina devastated Gulf Coast oil refineries.

Californians are now paying an average of $2.53 for a gallon of the cheapest grade of fuel. Last month, you could fill up for $2.16 in the South Bay.

The market “wants to go higher and the old records are vulnerable,” Tom Bentz, an oil broker in New York, told the Bloomberg News Service this week.

Meanwhile, oil companies are reporting record profits. Friday, Chevron reported a record $4.14 billion profit for the fourth quarter. Thursday, Shell reported a $2 billion profit.

[Mercury News]
Dammit, where are the electric cars? And when are we going to wean ourselves from oil? Or are we waiting for the huge, looming middle east war to cut off all supplies and force us into a societal collapse?