Gas Pump Prices Feed Record Profits for Big Oil
Blaming President Biden for increased as prices has become a national obsession of Republican politicians and their media channels. But profiteering by the oil companies, and many years of subsidies and support of the industry by Republican politicians, is where the blame lays. So does a dramatic post-pandemic imbalance between supply and demand – which is happening all over the world and not just in America.
Big oil disinvested in production when prices were so low during the global covid pandemic that they had to sell it at a loss. Production was cut by about 10% globally. Why have they been slow to increase production to keep up with the bounce back in worldwide demand? Because they are able to get much bigger profits on the same amount of oil they do sell as prices have skyrocketed. It does not help that the war on Ukraine by Putin, whom the radical right supported and praised, has reduced supply, further increasing prices.
The top five oil companies reported 300% more in profits in the first quarter of 2022 than last year. One doubled its earnings from a year ago. Another notched its strongest quarterly profit ever, and a third posted its best earnings quarter in nearly a decade. Their first-quarter profits were almost 28% of the price Americans pay for gas.
Republicans blame the problem on Biden’s efforts to turn to green technologies to combat climate change by reducing burning of oil. But the fact is oil companies are not investing to fill the surge in demand. They can make record profits from higher prices without increasing supply. They are sitting idle on 9,000 unused drilling permits on 12 million acres of leased public land, while generating huge profit increases for their shareholders. They will use about $40 billion in profits for stock buybacks this year, and more for increased dividend payments to shareholders.
President Biden has called on Congress to pass bills that would adopt use-it-or-lose-it terms for unused federal oil and gas leases and permits, investigate price gouging, and charge a windfall profits tax.
In May the House passed the Consumer Fuel Price Gouging Prevention Act with only Democrats voting aye. Democrats want to investigate whether the price of gasoline is being “manipulated by reducing refinery capacity or by any other form of market manipulation or artificially increased by price gouging practices”, including “the impact of mergers and acquisitions involving producers, refiners, transporters, and gas stations.” The bill has not been taken up by the Senate as Republicans can use the filibuster to kill it, even though 77% of all voters and 76% of Republicans are in favor of a federal ban on price gouging.
House Democrats have also demanded that oil companies cancel plans to use these profits for stock buybacks and dividends, that just benefit big shareholders, and instead focus on increasing investments in production to lower prices that benefit everyone.
The Republican response? Blame Biden but do nothing to curb excessive profiteering, while supporting tens of billions in oil industry subsidies. Why? Because Republicans receive five times more lobby money from oil companies than Democrats. Pathetic! Hypocritical! Corrupt! You decide.
To learn more, check out these links:
https://morningconsult.com/2022/05/25/gas-price-measures-survey/
https://www.statista.com/statistics/788056/us-oil-and-gas-lobbying-spend-by-party/
