Short economics review. The big international oil companies own some production, in the US including Alaska, North Sea, offshore Brazil, Canada, and other places. They also "control" production under various royalty arrangements in many foreign countries. Finally, the buy the remainder of the oil they need to fulfill demand on the open market. The open market price of crude oil has increased due to various factors beyond the oil companies' control: hurricanes in the Gulf, Iraq, demand from India and China, terrorist threats in Saudi Arabia, threats to Iran's production. We live in turbulent times.
When the price of crude goes up, the oil companies have to pay the going rate for the crude they buy. For the crude they own, and depending on the contracts, on the crude they "control", the increase is pure gravy. Call it "windfall profits", just like farmers who have wheat profit when there's a drought somewhere.
Why, you ask, don't they just cut their margins a little? Well, think about it. The last barrel they need to meet demand they're buying on the open market. That's the barrel they'd be trimming the price on. Why buy something and sell at a loss?
Another reason for high US gasoline prices is the shortage of refining capacity. This is where the oil companies have taken some deserved criticism. They did not invest in capacity as demand slowly increased because for years refining was a money-losing or low-return part of the business. Making some bad decisions is not a crime, however.
Every time gas prices spike up, there are investigations at the Federal and state level. These inevitably fade away without a whimper. Wonder why. No conspiracy.
Yes, I once worked in the "oil bidness", nearly 30 years ago. I guess I get dismayed seeing the American public and their politicians behaving like spoiled children.
There . . . feel better now.
