Well gas prices are skyrocketing again!
Is it from the hurricane? Or the need for greed?
Example-The State of Michigan has ample supply, according to our Governor. Then way did the price increase $.45per gal in 2 days?
How can we stop this? We are starving and they are loving it!
Oil Company Profits
In late July, Exxon announced its quarterly earnings of $11.7 billion, the largest quarterly earnings in U.S. history. The average person would say that Exxon is taking advantage of the American public and gouging the public at the gas pumps. The Exxon executives will tell you that the earnings as a percentage of revenue are very reasonable relative to other U.S. companies. So is the price of gasoline in line with the price of oil?
In a recent article by John David Powell who writes for the American Daily, he indicated that when crude is priced at $68 per barrel as it was last year, it accounts for 58% of the price of gasoline. When the price of gasoline is $4.00 per gallon, the price of crude accounts for 77% of the gasoline price. Several weeks ago when the price of crude peaked at about $145 per barrel, the price of regular gasoline was $4.35 per gallon in Chicago. At this level, let’s assume the price of crude still accounts for 77% of the price of oil although it could be a little higher.
A few weeks later, the price of crude dropped to $122 per barrel, a 15.9% reduction in the price. If the price of crude does, in fact, account for 77% of the price of gasoline, then the price of gasoline should decrease by 12.2% (77% of 15.9%). That should make the price of gasoline $3.82 per gallon, but it only went down to $4.13.
I realize that an argument by the oil companies is that the cheaper crude has not yet reached the customers in the form of gasoline. But it seems when the price of crude goes up, it affects the price of gasoline very quickly. Could this be a reason for Exxon’s profits?
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