Forget everything you’ve heard about OPEC, OPIC, crude prices, refinery costs, supply limitations, Iraq, pipelines and everything else regarding gas prices at the pumps.

Here’s the bottom line: gasoline prices have increased over 7.5% since 1994 but the rate of inflation has been limited to just over 2.5%. Had gas kept to the same rate as inflation, we’d currently be paying about $1.03 per gallon of regular unleaded fuel.

The question I’m asking myself, and the question all of you should be asking yourselves as well, is this: why are we paying so much for gas?

Oil companies would have us believe that price increase is a direct function of simple supply and demand economics. Events such as refinery accidents, the turmoil in the Middle East and OPEC’s tight production regulations are often blamed for limiting supply and consequently increasing price.

While these situations may hinder production and result in a lower available supply of gasoline, the truth is much more sinister – the true reason is 100% greed.

ExxonMobil provides a perfect example of consumer gouging and greed. From 2002 to 2003 gross revenue increased by 21% and net profit increased by 83% while oil production was only increased a modest .8% and natural gas production was dropped by 3%.

In addition, ExxonMobil has decided to close its Bakersfield, CA refinery citing "there was simply not enough crude supply to ensure the viability of the refinery in the long-term” even though California officials report there is a 20 to 25 year supply of crude oil in the area and Texaco is increasing its drilling in the area due to the large supply available.

ChevronTexaco increased net income by 539%. Its 2003 Annual Report states “Sales and other operating revenues increased 22 percent on higher prices for crude oil, natural gas and refined products.”

Gross petroleum product production at ChevronTexaco was decreased by 7% and the actual volume sold was 2.6% lower. Natural Gas production was dropped 5% and its volume sold fell an incredible 32%.

In addition, the feds have chosen this specific time to begin moving large amounts of oil into the Strategic Petroleum Reserve, our country’s ‘stockpile’ of oil, and OPEC has chosen to cut production by 1 million barrels per day as of April 1st. Al Jazeera reports that OPEC president Purnomo Yusgiantoro said: "Our projections indicate that there will be a significant surplus of oil in the second quarter of this year, and if this is not handled in a timely and effective manner, there is likely to be downward pressure on prices."

The bottom line is that the major oil companies are essentially decreasing production for the sole purpose of artificially decreasing the supply. And, as simple economics will tell you, a decrease in supply with an ever increasing demand leads to higher prices.

Instead of increasing supply to meet the increasing demand, oil companies are essentially cutting off the supply of oil and reaping the benefits – to the tune of a 539% increase in net revenues.

The problem is that we’re over a barrel (pun intended). Our country does not have the ability to decrease our dependence on oil as quickly as we’d need to drop demand and keep prices low. In addition, there is virtually no official commitment to researching and using alternative fuels.

It’s not that we can’t reduce our dependence on oil but rather that those that can create the change simply won’t – there’s no incentive to. If we spent the $12 billion earmarked for the President’s New Vision for Space Exploration Program at NASA on researching and implementing alternative fuel programs we could wean ourselves off oil in a fraction of the time that it will take us to send a man to Mars.

Big oil, though, would never allow such a thing to happen. To allow the proliferation of the alternative fuel industry would be suicide and unfortunately big oil has a huge influence in our federal and even state government. Politicians’ careers are made or broken on the money received from oil companies.

Even being the devout Republican that I am I can see the disproportionate influence oil has on our government and must concede that as long as our elected officials choose to receive support from oil, oil will forever be a major consideration for elected officials.

So – the next time you pull up to the pump only to find out that you have to take out a second mortgage just to fill your tank, pull out your cellular phone and give your representatives a jingle. Be sure to thank them for allowing the oil companies to gouge us ‘little guys’.

Sources:
ChevronTexaco 1999, 2000, 2001, 2002 & 2003 Annual Reports
ExxonMobil 1999, 2000, 2001, 2002 & 2003 Annual Reports
www.nasa.gov
www.enronwatchdog.org
www.opensecrets.org
sopr.senate.gov