- 2015 Federal Election
Gas pricing found suspect
A hundred years ago, John D. Rockefeller controlled most of the oil production and sales in the world through Standard Oil. The U.S. government, fearing that too much control was in one company, forced the break-up of Standard Oil into smaller oil companies, most of which continue today under one name or another.
The problem, though, is that they still behave as if they are one big company. They do this by a process which would be illegal in any other business – price fixing. This is made obvious by observing how prices of various brands of gasoline change by the exact same amount at the exact same time, and are always at virtually the same price as the “competition”.
If there was real competition, some companies would have a more efficient refining and distribution system which would enable them to offer lower gasoline prices. But that never happens because of the communication among the companies that results in the price fixing. So if some companies are more efficient, that just results in increased profits because they charge the same price as the others.
Another money-grabbing practice is the rapidity with which companies raise prices when the price of oil is rising, and the snail’s pace with which they reduce them when the price of oil drops. A couple of years ago, an oil company spokesman was asked why gasoline prices were dropping so slowly compared to the drop in oil prices. His answer was that it takes time for the lower priced product to work through the system. It makes amazes me how higher priced products work through the system seemingly over-night while lower priced products take weeks or months. It seems super-natural! Or crooked.
The price of fuel affects the price of everything, including food. While oil stock prices and CEO salaries are rising, more and more people will be going hungry. But I guess that doesn’t matter as long as the rich are getting richer.
In closing, I wish to point out that the local station owners have no control over gasoline prices. They just do as they are told, so no point in grumbling at them.
Dan Wiley, Terrace, BC