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Gas Prices Still High. Why?

Written by Luke Burgess
Posted September 12, 2005

When was the last time you've been to a movie theatre? For me it's been quite a while. I have friends who go to every new release that comes out and it boggles my mind. As soon as the new Police Academy or Weekend at Bernie's comes out, they'll rush to the theatre to throw their hard-earned cash at the big production companies.

Do I want to pay $9 for tickets to a movie that might not even be all that good and be lucky to sit in a painfully uncomfortable seat, next to BO-stenched strangers cramming $6 gummy bears into their mouth? Absolutely not.

I'll avoid the movie theater as much as I can. But every so often I get the "you never take me out anymore" speech from my girlfriend. Come on. We go out all the time. We go out to the grocery store, the post office, the DMV, we take out the trash together. But she doesn't want to hear that.

So every so often, my arm-twisted, I'm forced to schlep myself to the movie theatre. Saturday night was one of those nights.

We get to the theatre and peer though scantly-clad high school girls to pick a movie that we can agree on. I have to mention the inadequacy of high school girls' clothing because I was unprepared for what my eyes did see. I've seen more clothes on a woman swinging around a metal pole. Good lord people, don't let your kid out of the house if she's dressed like a hooker.

So we decide to see the new Steve Carrell flick The 40-Year-Old Virgin. We get through the line and pushed in front of the concession stand. They were charging $6 for a 32oz cup of soda, $8 for popcorn, and $4 for a candy bar! How are they getting away with this?

Yeah I know. Let the market work.

We go into the dark theatre. The guy with the gummy bears sits right next to me. We watch the movie. It sucks. And then we leave.

The whole time I'm mulling over this $8 popcorn. $8 for popcorn? This better be the greatest popped corn in existence. And then it dawns on me that I've been asking myself the "how are they getting away with this" question quite often lately. Especially at the gas pump.

Recently I've been in running debates via email and instant messenger concerning price gouging at gasoline stations.

Most of the debates have been with station owners who say that they do not control the price at the pump. They shift the blame to the oil companies, claiming that they are the ones that set the price. Not the owner.

But here's what really tickles my curiosity. If the oil companies really set the price, what accounts for the price difference between gas stations? I'm not talking about the difference in price between BP and Exxon. I want to know why two Exxons have different prices. Same company. Same gas. Different Prices.



I understand how taxes in different states affect price differences. But why is the Exxon around the corner from my house charging $3.19 a gallon and the Exxon right down the street charging $3.49 a gallon?

Moreover, gasoline futures have fallen to almost pre-Katrina prices. But this has not been reflected at the pump. One has to be curious as to why.

If the futures have fallen to pre-Katrina levels, retail gas should have followed. But they haven't.

It always two steps forward and one step back in the gas game. This time, however, it might have been three steps forward.

Gas stations around the country continue to charge overinflated gas prices.



The prices above reflect current gasoline highs as reported by motorists on gasprices.com. How are they getting away with this? I don't know. Hopefully someone will bring this nonsense to a halt. At least someone is trying.

The State of Florida has filed the first suit against a gas station for price gouging.

On Friday Attorney General Charlie Crist filed the state's first lawsuit against a service station for price gouging because of hundreds of complaints from motorists over high gasoline prices.

The Tallahassee station on evacuation route upped price of gallon from $2.80 to $3.50 in one day.

Gulf Production Still Down

The U.S. Minerals Management Service reported that 122 of the 819 staffed platforms in the gulf are still shut down. These platforms account for close to 60% of the Gulf's normal daily production of 1.5 million barrels.

Also blocked is 3.8 billion barrels of natural gas. That's about 38% of the gulf's normal daily gas production of 10 billion cubic feet.

Since August 26, 17.1 million barrels of oil and 84.2 billion cubic feet of gas have been shut down.

Normally, the Gulf of Mexico produces 547.5 million barrels of oil and 3.65 trillion cubic feet of gas annually. At current prices that's $35.5 billion worth of oil and $40.1 billion in natural gas.

Could this be the reason gas prices are so high?

I hate to say it, but I think that we're just going to have to get used to it. Current oil and gas prices are here to stay.

And I was surprised today to find out that oil prices retreated to a five day low of $62.80.

If you asked Alfred E. Newman what he thought about $63 oil, he'd probably say "cheap!"

And at $63 a barrel OPEC, who controls 40% of world oil production and about two thirds of the world's proven oil reserves, is making a killing. And you'd think they'd be happy about it. But OPEC's Acting General Secretary, Shihab-Eldin, said "We at OPEC are not interested at all in record prices."

Yeah right. If I produced something that was selling at record prices, I'd sure be real heartbroken about it.

Who do those clowns think they're kidding? Not this old boy.

The Beast Speaks Out of Both Sides of its Mouth
In an interview with German magazine, Der Spiegel, Shihab-Eldin, said that the cartel is planning to announce an increase in production of 2 million barrel per day at their next meeting in Vienna on September 19.

However, in a statement released after the interview, OPEC said that Shihab-Eldin did not say that the organization wants to raise oil production.

I read the interview. And it's pretty clear to me. Shihab-Eldin was quoted saying, "We will increase our production. The OPEC states with reserve capacity will participate, in particular Saudi Arabia. That will raise the OPEC production by just under 2 million barrels per day."

Shihab-Eldin said that OPEC wants to increase output because its members are not interested in record high prices that could trigger a recession. But I think the increase it just a way to increase revenue

He blamed unscrupulous businessmen for exploiting the hurricane disaster to obtain higher prices. It sounds to me like the pot calling the kettle black.

-Luke Burgess
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