Wednesday, November 09, 2005

Oil Company Profits

Three words for you: supply and demand. Ya gotta love hypocritical congressmen getting after Oil Companies for actually, finally, making money.

75% of the cost of a gallon of gas goes to the government. Like grocery stores, oil companies have very tight profit margins.

So, a confluence of things have happened to up oil prices: multiple natural disasters that have affected refineries (none have been built since the 70s--California rejected a proposal to build one a year ago), world consumption (read China and India) has increased wildly and a few countries control how much oil gets on the market (read OPEC).

High demand + low supply = High Prices

Congress needs to shut up, but they won't. This charade is to demonstrate to panicky consumers who live check to check that they are "doing something about the problem" when they are doing nothing of the sort. They are covering their collective hineys so when it gets cold and the blue states get bluer and colder and scream about home heating oil prices the politicos can say "we did everything we could" and...."it's Bush's fault!!!!!!"

By the way, wasn't the war in Iraq all about blood for oil? And, shouldn't our oil prices be lower because of this? Just asking.
More blogs about the woodlands rita.