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Show Gas companies continue to pump American public dry Whether to gouge the American public with unjustifiably exorbitant fuel prices and lay the blame on a ' 'crazed Arab dictator,' dic-tator,' or tighten the reins and hold to a more reasonable profit margin and let billions of dollars slip away merely to lend support sup-port to an already over-taxed U.S. economy is the question facing fac-ing the big oil companies across the nation. Guess how they've chosen. Figures from the New York Mercantile Exchange, where much of the nation's oil is bought and sold, show that the oil I companies were maintaining a profit margin from crude to unleaded of only 7.27 cents a gallon last January, as reported in a article from United Press International. In June, prior to the Iraqi invasion of Kuwait, crude oil was trading at 41.57 cents a gallon while unleaded gasoline was selling for 61.37 cents a gallon, leaving the oil companies a profit margin of 19.8 cents a gallon. The upward shift in profits was the result of plummeting crude prices in the first half of 1990 without a downward adjustment ad-justment from oil companies in the wholesale price of gasoline. gaso-line. In addition, while crude prices dropped and wholesale prices remained about the same between January and June, retail prices at the pump rose about 7 cents a gallon. Before the invasion, station owners were operating with a profit margin of about 12 cents a gallon. On Aug. 10, more than a week after the Iraqi invasion, oil companies were still maintaining a profit margin of 17 cents a gallon. However, most retail outlets across the nation were claiming a markup at the pump between .03 and .08 cents a 1 gallon, according to reports from CNN News and interviews with some Bountiful retailers. ' . It would appear that retail outlets are being forced to reduce their margins on gasoline sales in order to compete in the market while the oil producers are making sure they squeeze i every cent out of the American consumer they can. i Many oil company officials explain the disparity in prices as a result of a shortage of refineries. i "A lot of refineries have shut down since the '70s oil crisis j because of economic reasons," said Bob Mason, manager of the Phillips 66 refinery in Woods Cross. Officials claim environmental restrictions and the prospects of alternative fuels have made it too costly and speculative to expand refining capabilities. Consequently, they say fuel reserves re-serves have been diminishing, which causes a rise in the price. However, because of the same economic pressures that caused so many shutdowns since the '70s, most of the existing refineries have been forced to operate in a more efficient manner, which only makes good business sense. " Mason said the Phillips plant is currently operating between 90 and 95 percent capacity. In addition, virtually all the crude oil processed at Utah refineries originates in Utah and Wyoming, Wyom-ing, and Mason said there have been no shortages of crude so far. So why did the price of gas skyrocket at the pumps the day Iraq marched on Kuwait? The pump price reflected an im- mediate increase on Persian Gulf crude oil that had not yet been purchased, let alone shipped and refined. Furthermore, what has the price of Persian Gulf oil got to do with the price of oil pumped in the U.S.? Iraq didn't invade Utah or Wyoming. Wyom-ing. So why is gasoline produced from U.S. crude suddenly so costly? Mason said it's because it's a competitive market, and the I prices on the exchange are very speculative. I ' Doesn't a competitive market refer to one where the company com-pany who can produce and sell its product at a lower price than its competition gets the business? It would appear that all the oil companies are maintaining the same price as their competition, competi-tion, which happens to be the highest price they can get, and the American public is "getting the business." Incidentally, the practice of businesses maintaining the same price as their competition to ensure all get the maximum profit possible is commonly called 'price fixing, and 'price fixing is SEEGASPG.A-7 Gas Cont. fromA-6 illegal. At least, it's illegal for most enterprises. What it all boils down to is greed. Greed from a dictator in Iraq who wanted more than he had. Greed from oil companies in the U.S. who see an opportunity to maintain a high margin with an even higher dollar ring for more profit at the expense of a helpless public while they tack the blame on a "madman" across the water. And greed from politicians who are afraid of losing financial backing from the bloated oil companies for their pet projects or personal gain. Saddam Hussein may have once again awakened the sleeping sleep-ing giant. This time, however, the giant may only be interested in lining the pockets of its elite few. |