Profit Sharing

We have been told that oil prices have peaked and are slowing coming down. Part of the reason for the reduction of gas prices is that demand has dropped and more supply has come on-line. The supply is a result of some refineries which were "closed down for repairs" being revived and are now producing usable fuel.

At the same time, the Federal Trade Commission has released a report which looked at the narrow issue of why gas prices spiked in September 2005. The final conclusion was that the FTC did not know. One of the problems with the study was that if an oil company chose to not put its full force behind getting refineries on-line, there was no way for a government study to show that there were intentional delays that resulted in artificially inflated gas prices.

Several summers ago California suffered from high energy prices and rolling blackouts. A great deal of this was a result of Enron contacting powerplants and telling them that they should shut down for repairs as their energy was not needed on the grid. The powerplants complied, which reducing the amount of energy on the grid. This resulted in higher prices of the remaining supply and the need for rolling blackouts to try and balance the demand and the artificially diminished supply. Northern California all but came to a complete stop.

As is being shown by the United States in the Skilling and Lay trial that has recently been submitted to the jury, Enron obtained exorbitant profits from manipulating the market and abusing the power which it had wielded. There is no reason to believe that the few oil companies that are left have not engaged in the same type of market manipulation. There are only a few major oil companies in this country, and they are the most profitable companies in the nation - possibly the world. These companies know that the nation is beholden to their product and that the nation will pay any price that is placed on the product. If the companies reduce the amount of usable gas by scaling down the refinery capacity and the number of refineries which are operational, then they can force the prices up and increase the amount of profit that is procured.

We have seen a company manipulate the fifth largest economy in the world in order to obtain unjust profits. There is no reason to believe that the oil companies are any more noble than Enron in that they would not collude to manipulate the market and ensure that they too can obtain huge sums of profits at the detriment of the public’s pocketbook and nation’s overall economy.

The only entity that is big enough to take on these companies and force them to abide by legitimate means of obtaining profits and staying in business is the United States government; however, since we currently have "leaders" who have worked in the oil industry, it is unlikely that anyone in this Administration will go after the companies or even question their actions. Thus, there is a big pay day for all of the oil companies until at least 2008 , and they know it.