Oil companies make much more than 50 cents a gallon. They control the entire pipeline from ground to pump.
No they don't.
They don't own enough oil production to meet the demand, they have to buy a lot of the oil at the world price.
Also they don't have monopoly power in refining, distribution, or at the retail level.
"There are currently about 170,000 gasoline service stations in the United States, and, according to Cohen, ExxonMobil owns and operates less than 1,000 of those.
"We control the pricing at less than a thousand gasoline stations in the United States... We have about seven percent of global refining capacity and 12 percent in the United States. That's not market power." He notes that ExxonMobil couldn't manipulate the price of gasoline even if it wanted to.
Cohen acknowledges that "right now, [profit] margins are good," but says, "it's a cyclical business."
Even so, I believe many people would be surprised to learn that as good as ExxonMobil's profit margins are, it's government that is reaping the biggest "windfall" in this time of higher gas prices.
According to Mr. Cohen, in the first quarter of 2006, ExxonMobil made $8.4 billion in total profits. Profits in the U.S. accounted for $2.3 billion of that total. And what did ExxonMobil pay in total government taxes in the U.S. in this first quarter? $3.7 billion. The company paid $1.4 billion more in taxes than it took in profits.
In fact, Mr. Cohen says, from 2001 to 2005, ExxonMobil's total U.S. tax bill was $57.1 billion, and its total earnings in the country were $34.9 billion. This means that over the most recent five-year period, the company paid $22.2 billion more in taxes than it earned in profits.
In 2005, he says, ExxonMobil earned 9.7 cents per dollar of sales in the U.S. To put this in perspective, he notes that pharmaceutical companies earned 17.6 cents per dollar, banks earned 19.1 cents, and household and personal products firms earned 10.9 cents."
nationalcenter.org
The gas they produce at $3.50 costs the same to them as it did under Clinton when it cost us $1.75.
Even for oil that they do pump, refine, distribute and sell themselves, costs have gone up. Not just general inflation (although that does have to be considered), but also more of the new finds are in fields that are more expensive to produce from or need new techniques to extract oil. The cheap and easy fields are a lower part of oil production than they used to be, and many of them are owned by national oil companies, not Exxon-Mobil, Shell, BP, etc. |
