While there have been many stories about inflation and it’s causes, there seems to be little discussion about the role that corporate greed is playing. At a time when gas prices are at historic highs, we hear about Russia’s invasion of Ukraine causing instability in the oil market, but is that really what’s going on?
The price of gasoline is theoretically based upon the price per barrel of oil. According to Macrotrends, the current price is $80.23 per barrel. Historically, the price has gone as high as $175.23, in May of 2008. If there is truly a relationship between the price of crude and the price of gasoline at the pump, then we should be paying less than half the price per gallon than we were paying in 2008. Does anyone remember when the price of gas went up to $9 per gallon nationwide, back in 2008? Of course not.
In fact, the average per barrel price dropped to $21.89 in April of 2020, when the pandemic caused a lot of people to stay home, causing the demand to drop. Surely, we can all recall those glorious days when we were able to tank up for about $1 per gallon, back in 2020. Don’t remember that? Not surprising. The lowest the price fell then was about $2 per gallon. In fact, in 2020, when demand dropped, there was even a time when cruse oil was selling for LESS THAN ZERO because producers had to pay to have the oil removed because they could not afford to store it. Let me know if you remember when they were paying you to gas up your car, back in 2020. Also, keep in mind that crude prices were about $18 per barrel before the pandemic hit. In 1998, when oil was $18, we were paying around $1 per gallon at the pump. When oil companies tell us the price we pay is determined by the price of crude, and then blame that on OPEC, it is simply not true.
Even if the price per barrel of crude was somewhat reflected in the price you pay at the pump, and even if we were to assume that the invasion of Ukraine was responsible for soaring gasoline prices, how can we explain the fact that, after almost a year of military buildup along the border which signaled to the world that the invasion was likely; Russia finally invaded on Feb 24th of 2022. The price of crude started to rise, from about $70 per barrel, in November 2021, possibly in anticipation of the invasion, and peaked at about $117 per barrel in May of 2022. It then dropped to about $80 per barrel in September, where it remains. Despite the fact that Russia is still engaged in Ukraine, there does not seem to be any correlation between that war, and oil prices. The price of crude, today, is virtually the same as it was in the summer of 2021, yet gasoline in the summer of 2021 was around $3 per gallon. And the war in Ukraine seems to have had almost no impact on crude oil delivery or prices.
So, we can assume that the price of crude does not have a direct correlation to the price we pay at the pump. Where does the money go, if it is not going up the oil chain to the well? It appears we need to look no further than the oil companies for the answer. According to Reuters, 4 of the 5 largest oil companies posted profits of nearly $50 billion in the last quarter. This is especially alarming when coupled to the fact the companies are actually selling less product than they have in the past. Between conservation efforts and better mileage vehicles, the demand for fuel has lessened, yet these companies are actually making record profits, of almost $200 billion per year. This means the oil companies are making a higher percentage of profit, per gallon, that ever before.
Of course, America does run on gasoline alone. Other fuel oil prices are even worse than gasoline prices. We use about 47 billion gallons of diesel each year and current prices are well over $5 per gallon. Diesel is not only used by guys compensating with a big pickup that rolls coal at every stoplight. Diesel is what gets your food delivered by trains and trucks. Diesel gets your new car delivered. Diesel powers your cruise ship. Everything you do can probably be traced back to some diesel that made it or transported it. Some electric plants even use petroleum based fuels. So when the oil companies engage in price gouging, it not only costs you at the pump, it costs you at the grocery store, the clothing store, the lumber store, your heating bill, and everywhere else.
According to OpenSecrets.org, oil industry lobbyist have paid over $90 million to your elected representatives, so far this year. The average bribes, over the last 15 years, has amounted to $133.38 million per year; totaling over $2 billion since 2008. Can you imagine the amount of health care that could have been provided to Americans if that $2 billion had been paid into Medicaid or Medicare? Instead, it has been lining the pockets of elected officials who have consistently and conveniently failed to do anything at all to regulate the price of petroleum fuels. It is interesting to note that the highest payment year was 2009, when lobbying payments spiked following the spike in the price of crude in 2008. During the 14 years from 2008 and 2021m the lowest payment year was 2016, the year the crude price fell to less than zero. There may not be a correlation between the price of crude and the price at the pump, but it appears there may be a correlation between the price of crude and the amount of bribes paid in DC.
Oil company profiteering drives inflation. There are other factors as well, but the biggest factor will always be where the most money is, and that happens to be oil companies. Do you think it is time to stop giving oil companies tax breaks and make them bear their fair share of tax burden? At the very least, if they are raking in $200 billion per year, they should be paying a windfall profit tax. It appears that as long as we allow oil companies to lobby our congressional representatives, we can expect to see no help for average Americans.
OpenSecrets.org also tracks where the money goes. Republicans garnered 79.67% of those bribes. Democrats raked in 20.21%. The remaining 0.12% went to “Other” people, which could include staffers, restaurants, taxis, or whatever. It is ironic that the people clamoring most indignantly about our current inflation, are the same people who are taking in the most money from the oils companies that are driving inflation. This is a typical example of gaslighting, and many Americans are being sucked in by it. If there was ever a time when the importance of voting for progressive candidates was clear, this is that time. We need to flush out those who are profiteering in congress, both Republican and Democrat, and elect people who will act responsibly, in the best interest of Americans, not just oil companies. Our future depends upon it.