ExxonMobil Accused of Price Gouging

[Nelson Atwell]

Considering they made $10 Billion in profits in the past three months, they shouldn't be surprised by this. :blink:

 

[Rich Carrillo]

I believe it. They have been doing this for awhile. I remember reading in the 3rd quarter of 04 they made somewhere around a 56% profit. It was the highest ever recorded for an oil company. You'd think the gov't would intervene, but then again who's paying their bills? :angry:

 

[WXMotorSports DecalsPartsAccs]

No way it's supply and demand. Just look at the price of water and everything else...LOL



Some analyst on CNN over the weekend predicted gas would under 2.00 a gallon by the summer. I'm not holding my breath.

 

[Tom Schindler]

No way, price Gouging, they would NEVER do that.



Lets see if the government will actually investigate.





Tom

 

[Shawn Hennessy]

Can someone adequately demonstrate what the government can do? I mean...seriously...what can this or any other administration do? I don't see congress taking action (democrat or republican)...perhaps it is because they are all on the take?



No.



Gouging is difficult to prove. Face it. Collusion (with the exception of Major League Baseball) is next to impossible to prove unless an informant comes forward.



Something to think about...what if our governement were forcing the automakers (by way of the car-buyers) to reconsider the race for the biggest, baddest gas guzzlers? What if this administration were taking a passive-agressive role in influencing the market? I am not saying that this is what is happening...just some food for thought.



Meanwhile, the oil companies get wealthy.

 

[Mark B]

What is 'price gouging' in a free market? Interesting article (to me) from 5 years ago:



The term "price gouging" is suddenly in vogue among politicians and news announcers because of the recent run-up in gasoline prices in the Midwest. But what exactly constitutes "gouging?" Consider the following cases:



* Paying $12 for two thin slices of cold greasy pizza and two small Cokes in an airport departure concourse.

* My neighbors selling a house for eight times what they had paid for it years ago.

* Twin Cities apartments renting for $150 more per month than a year ago.

* Me charging $200 per hour as an consulting expert in a legal case when I get less than $50 per hour teaching at Metro State University.



In a market economy, prices frequently seem unfair to buyers. But whenever anyone has something to sell, they try to get as much for it as possible, whether it is their labor, a used car, a house or items on a garage sale. That is human nature.



Would society be better off if we enacted laws requiring anyone selling a good or service to have their prices approved for fairness by some government commission? Or laws allowing consumers to challenge any seller who seems to be gouging, with significant penalties for those caught selling well above their cost? I think not.



While we may not like it when a particular set of sellers charge what we think is a high price for a product we want, requiring government approval of a fair price for any particular transaction opens up a Pandora’s box of complications. Price controls lead to wasted resources and even greater unfairness than the market.



Punishing price "gouging," defined after the fact, introduces greater uncertainty into business that can only be overcome with average higher costs to consumers. If potential producers know that their prices may be lowered arbitrarily at times in a certain sector such as oil, they will be less inclined to enter that sector.



Greater risk in business, like greater risk in investments, can only be overcome with greater rewards. Thus the cures that some are proposing to deal with current gas price "gouging" are ultimately far more harmful than the problem.



"But gas prices are different," you protest. "When an old couple sells a house for much more than they paid, it is because the house is worth that much in today’s market. They are not colluding with anyone else to fix the price of houses."



No, the old couple is not colluding with anyone. But despite popular belief to the contrary, there is little evidence of collusion in setting gasoline prices either.



In the popular mythology of U.S. economic culture, there are two bogeymen: grain companies that collude to keep prices low and oil companies that collude to keep prices high. But repeated investigations of both industries by government commissions and private researchers fail to turn up concrete evidence of price fixing.



The existence of collusion is not supported by the long periods of low gasoline prices such as the one that ended in the last year. If big oil companies have such market power, why do they tolerate periods of low prices and squeezed profits such as 1996 to 1999?



It is not a myth that the wave of mergers within the oil industry, such as British Petroleum’s buyout of Amoco, was largely driven by the need to cut costs in the face of successive years of low profits. Nor is it a myth that profits in petroleum refining in the United States are so low that the major oil companies have largely pulled out of that activity.



It is human nature to get as much as we can when we have something to sell. It may also be human nature to resent it when someone else does the same with a product that we want to buy. But if we are wise, we should avoid the temptation to enact price controls or impose ex post facto punishment for actions, such as noncollusive price se

 

[Tom Schindler]

Dive,



I see your point. On the other hand, if crude oil costs, lets say $50.00/BBL and gas is $1.75 gallon, then crude goes up to $60.00/BBL and gas is now $2.50/gallon, a quick math problem can help the cause.



I know these numbers are hypothetical, but nonetheless, informative.



The price of crude increases by 20%, but gas prices rise by 42% something is fishy. Then to top it off, profits by the oil companies are at record highs, then something is really fishy.



On the other hand, if the oil company makes 30% profit and gas is 2.00/gallon, they make 60 cents. If gas is $3.00/gallon, they will then make 90 cents. If they sell 1 million gallons at $2.00 per gallon, they make $600,000.00. 1 million gallons at $3.00/gallon, they will make $900,000.00. That would not be price gouging.



As for the government "allowing" the oil companies to inflate the prices to curtail the HP wars, I wouldn't be suprised. I read an article that never before have there been so many cars out there with as much HP now as there has ever been before. I forget the actual numbers, but the engines today put out more power then the heydays of the late 60's early 70's of the muscle car era. 400 HP is not too un-common.



You never really know what the truth is. We are only being told what they want us to know. Be it the media or the government.





Tom

 

[Taco Jackson]

Amen to fy10lyny's post. It dissapoints me that such a large majority of Americans are clamoring for the government to cap, adjust and set prices. That's been tried before, it's called Socialism, and it worked awsome for the U.S.S.R. didn't it? America is a capitalistic society. Getting the government involved is a sure way to wreck the economy completely. I want to see $5 a gallon gas. I want it to totally suck for awhile. Just recently Ford announced they were going to make what, like 10 more models of Hybrid cars? Coal comes back into realistic territory as a source of oil at the current per barrel prices of oil. Teaming masses of entrepeneurs are out there and if we see some solid evidence of long term high gas prices you better believe the capitalism that built this country will kick in and bring us all kinds of alternate energy sources, which will lower our dependence on the middle east every step of the way. Bring on the expensive gas.

 

[Jeff C]

Oil companies say that prices spike because all the refineries are running at near max efficiency. WTF is up with that. I know that Alabama power is required to run at 80-85% efficiency (by law) so that when something does happen, like Tornados, Hurricanes, etc, it doesn't disrupt everything. Granted, profits aren't as high, but.....When refineries don't run at full capacity, the bean counters aren't happy, and then when something happens, like a couple of major hurricanes, they point to the fact that they can't refine any more as a cause for gas price increases. I'm all for a free economy, but when they basically have a legal monopoly, and the price of the necessary commodity doubles over the course of a year, something's up. I think the companies wanted to see how far they could push it, and I wouldn't be suprised if a few CEOs cought bullets over the next year or so. I'm not wishing them dead, but one of these gas station owners is going to snap, and find himself a nice room in a book depository somewhere and handle things.

 

[Jim Reeves]

The last thing in the world we need is to have the government involved any more in our lives. When hurricane Katrina came through and shut down the pipelines, people in my home town made a run on the gas pumps. It was a race to see who could get there first. I was on empty so I had no choice (yeah, right!) but to fill up. The guy beside me at the pump had his truck full of 5-gallon gas cans and he was filling them up as fast as he could go, all the while complaining about how high the price was. It was hard not to laugh at him. If you want the price of something to go down, the last thing you should do is line up to buy it. Simple 7th grade supply and demand economics. Either it's a free market or it is not. My father-in-law just paid $4,500 for a months supply of antibiotics he needed for an infection he picked up while having a simple surgical procedure in a local hospital. Why do they charge so much? Because they can. The demand drives the price. If everyone in this country would concentrate on using less gas, the demand would go down and the price would go down. Could I plan better, make sure I do my errands between home and work so I don't have to make unnecessary trips, walk when it's only a couple of miles, use public transportation and carpool? You darn right. Will I and millions of other Americans do it? Probably not.

 

[Spencer Hammond]

There is no free market on when it comes to the oil industry. The oil giants ei. Exxon, Mobil ect.. pump the oil, they own the refinery's and they own the stations. WHere is the free market here? Were being told that it's not the oil that is causing the high prices but that we don't have enough refinery's. Why won't they build more refinery's? Oh ya, because they can keep an inflated gas price. If the refinery's were independant from the oil companies I'd have more faith in the system.

 

[Ryan Schaecher]

Market economics dictate prices. Exclusivity and monopolism are market forces taken to the extreme. Keeping the government out of markets is the best for everyone in the long run. Prior to deregulation, anyone who wanted to start an airline pretty much could with enough start-up cash. Effiency was poor, but airlines made money. After deregulation, only the most effiecient survive. The market has dictated how much money a passenger will be willing to pay to fly between Chicago and New York. If you can't make money on that fare, you fold. Why shul dthe government bail you out?



Amtrak can't make money. Hasn't in how long? How much does it cost the tax payers every year to keep Amtrak alive?



Government regulation and taxes are forms of artificial inflation. When the government sets up your retirement program (or part of it any way) in the form of Social Insecurity, the effiency of the program drops. For every dollar invested in SS, less than $.75 actually gets invested. Compare that to just about any 401(k) where for every dollar invested, $.96 is actually invested. If you charge more than that, you'll lose business to your competition.



A new refinery hasn't been built since 1976. Part of that has been the desire to run at highest efficiencies of the refineries, but the majority of the reasons that there hasn't been any new refineries is the fact that all the environmental regulations cause the expense of new refineries to be more than the profitability of the refinery. New enviromental restrictions are added every year not only to refineries but to formulations of gas and diesal making oil companies jump through hoops to produce fuel. Let's loosen up some of the restrictions and allow the oil companies to build new facilities and go from 46 or so formulations of fuel to mabe even 23 or so. That would greatly reduce the cost of gas.



We can blame alot of out fuel problems on tree-hugging hippies and rampant environmentalism. I am a firm believer that global warming is a farse, a ploy developed by liberals to scare the bejezus out of people. There is no proof of it. Moreoever, any slight increase in temperatures can be easily explained by natural casues, out of the reach of man kind. The egotism of some poepl to believe that mankind can have that great an impact on things like raising the global tempurature enough to melt ancient glaciers and "flood the earth" astounds me.



Let's look at drugs for a moment:



Merck and Company works for 7 years to develop a new drug to work as an anti-inflamatory. That's seven years of paying multi-millions in R&D, paying people, new equipment, patents on new processes and dealing with government regulation. Then after 7 years, they are ready for clinical tests. Phase one goes for 1 year with a experimental population of 500 people, 1/2 with the drug, 1/2 with placibo. These people are paid $x and given their drugs. We're up to 8 years. They spend the next 6 months evaluating Phase One, and modifying the formula along with production capabilities to gear up for large scale production. Phase 2 begins with two years of a larger test population. Were up to 9-1/2 years before $.01 is made on the drug. 6 months later, with phase 2 complete and production capability ready, the FDA looks over the data, facilities, side effects reported, etc. They approve the drug. The next day Merck starts selling the drug. 10 years of R&D, testing, government over sight, etc to develop a drug called Vioxx. A patient dies because he is prescribed a does that is 4 times more than the recommended dose. A lawyer gets involved. The widow gets $250 million.



Total cost before lawsuits: $~25 million in R&D, testing, government fees, etc

Total so far in lawsuits paid out: $~400 million

Profits Merck took to start developing a new drug: $~25 million



Why do drugs cost so much? ~$450 million for a drug that can no longer be sold. With 10,000 patients taki

 

[Tom Schindler]

R Shek,



That is very true. What if the drug companies falsify documents making the drug they invested in "work" as they wanted to? The FDA did not catch those misleading statements. Who should be responsible?



Is it the drug companies fault?



At the same time, we in the USA have to pay the brunt of the costs of the drug. Viagra in the USA might cost $2.50/pill. Jump the border to Mexico and the price is 50 cents a pill, maybe less. Same research, same drug, same everything. The price is different. Why is that? because they can!





Tom

 

[Richard L]

It was independent gas station owners that are guilty of price gouging. Not Exxon/Mobil Corp.



The prices charged around here are all within a few cents of each other and Exxon/Mobil have usually been a few cents cheaper than the other brands.



The profits made by Exxon/Mobil are based on the huge demand for gasoline which drives the price higher. While we make think that in light of these profits, that the oil companies should just reduce the price, but it doesn't work that way.



I will repeat this again! The only way for we as individuals to insulate us from the higher gas prices is to buy stock in Exxon/Mobil, or Shell, or any other company that you think will give you the greatest return on your investment. Had you bought shares in Exxon/Mobil a few years ago, you would not be complaining about the price of gas today.



...Rich

 

[TrainTrac]

An excellent column on "price gouging" by ABC News 20/20 host John Stossel:

In praise of price gouging

by John Stossel

September 7, 2005





Politicians and the media are furious about price increases in the wake of Hurricane Katrina. They want gas stations and water sellers punished.



If you want to score points cracking down on mean, greedy profiteers, pushing anti-"gouging" rules is a very good thing.



But if you're one of the people the law "protects" from "price gouging," you won't fare as well.



Consider this scenario: You are thirsty -- worried that your baby is going to become dehydrated. You find a store that's open, and the storeowner thinks it's immoral to take advantage of your distress, so he won't charge you a dime more than he charged last week. But you can't buy water from him. It's sold out.



You continue on your quest, and finally find that dreaded monster, the price gouger. He offers a bottle of water that cost $1 last week at an "outrageous" price -- say $20. You pay it to survive the disaster.



You resent the price gouger. But if he hadn't demanded $20, he'd have been out of water. It was the price gouger's "exploitation" that saved your child.



It saved her because people look out for their own interests. Before you got to the water seller, other people did. At $1 a bottle, they stocked up. At $20 a bottle, they bought more cautiously. By charging $20, the price gouger makes sure his water goes to those who really need it.



The people the softheaded politicians think are cruelest are doing the most to help. Assuming the demand for bottled water was going to go up, they bought a lot of it, planning to resell it at a steep profit. If they hadn't done that, that water would not have been available for the people who need it the most.



Might the water have been provided by volunteers? Certainly some people help others out of benevolence. But we can't count on benevolence. As Adam Smith wrote, "It is not from the benevolence of the butcher, the brewer or the baker, that we can expect our dinner, but from their regard to their own interest."



Consider the storeowner's perspective: If he's not going to make a big profit, why open up the store at all? Staying in a disaster area is dangerous and means giving up the opportunity to be with family in order to take care of the needs of strangers. Why take the risk?



Any number of services -- roofing, for example, carpentry, or tree removal -- are in overwhelming demand after a disaster. When the time comes to rebuild New Orleans, it's safe to predict a shortage of local carpenters: The city's own population of carpenters won't be enough.



If this were a totalitarian country, the government might just order a bunch of tradesmen to go to New Orleans. But in a free society, those tradesmen must be persuaded to leave their homes and families, leave their employers and customers, and drive from say, Wisconsin, to take work in New Orleans. If they can't make more money in Louisiana than Wisconsin, why would they make the trip?



Some may be motivated by a desire to be heroic, but we can't expect enough heroes to fill the need, week after week; most will travel there for the same reason most Americans go to work: to make money. Any tradesman who treks to a disaster area must get higher pay than he would get in his hometown, or he won't do the trek. Limit him to what his New Orleans colleagues charged before the storm, and even a would-be hero may say, "the heck with it."



If he charges enough to justify his venture, he's likely to be condemned morally or legally by the very people he's trying to help. But they just don't understand basic economics. Force prices down, and you keep suppliers out. Let the market work, suppliers come -- and competition brings prices as low as the challenges of the disaster allow. Goods that were i

 

[TrainTrac]

And another about the subject of gas prices by George Mason University Professor of Economics Dr. Walter E. Williams:

Gasoline prices

by Walter E. Williams



August 31, 2005





Nationally, the average per gallon price for regular gasoline is $2.50.



Are gasoline prices high? That's not the best way to ask that question. It's akin to asking, "Is Williams tall?" The average height of U.S. women is 5'4", and for men, it's 5'10". Being 6'4", I'd be tall relative to the general U.S. population. But put me on a basketball court, next to the average NBA basketball player, and I wouldn't be tall; I'd be short. So when we ask whether a price is high or low, we have to ask relative to what.



In 1950, a gallon of regular gasoline sold for about 30 cents; today, it's $2.50. Are today's gasoline prices high compared to 1950? Before answering that question, we have to take into account inflation that has occurred since 1950. Using my trusty inflation calculator (www.westegg.com/inflation), what cost 30 cents in 1950 costs $2.33 in 2005. In real terms, that means gasoline prices today are only slightly higher, about 8 percent, than they were in 1950. Up until the recent spike, gasoline prices have been considerably lower than 1950 prices.



Some Americans are demanding that the government do something about gasoline prices. Let's think back to 1979 when the government did do something. The Carter administration instituted price controls. What did we see? We saw long gasoline lines, and that's if the gas station hadn't run out of gas. It's estimated that Americans used about 150,000 barrels of oil per day idling their cars while waiting in line. In an effort to deal with long lines, the Carter administration introduced the harebrained scheme of odd and even days, whereby a motorist whose license tag started with an odd number could fill up on odd-numbered days, and those with an even number on even-numbered days.



With the recent spike in gas prices, the government has chosen not to pursue stupid policies of the past. As a result, we haven't seen shortages. We haven't seen long lines. We haven't seen gasoline station fights and riots. Why? Because price has been allowed to perform its valuable function -- that of equating demand with supply.



Our true supply problem is of our own doing. Large quantities of oil lie below the 20 million acre Arctic National Wildlife Refuge (ANWR). The amount of land proposed for oil drilling is less than 2,000 acres, less than one-half of one percent of ANWR. The U.S. Geological Survey estimates there are about 10 billion barrels of recoverable oil in ANWR. But environmentalists' hold on Congress has prevented us from drilling for it. They've also had success in restricting drilling in the Gulf of Mexico and off the shore of California. Another part of our energy problem has to do with refining capacity. Again, because of environmentalists' successful efforts, it's been 30 years since we've built a new oil refinery.



Few people realize that the U.S. is also a major oil-producing country. After Saudi Arabia, producing 10.4 million barrels a day, then Russia with 9.4 million barrels, the U.S. with 8.7 million barrels a day is the third-largest producer of oil. But we could produce more. Why aren't we? Producers have a variety of techniques to win monopoly power and higher profits that come with that power. What's a way for OPEC to gain more power? I have a hypothesis, for which I have no evidence, but it ought to be tested. If I were an OPEC big cheese, I'd easily conclude that I could restrict output and charge higher oil prices if somehow U.S. oil drilling were restricted. I'd see U.S. environmental groups as allies, and I would make "charitable" contributions to assist their efforts to reduce U.S. output. Again, I have no evidence, but it's a hypothesis worth examination.

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[TrainTrac]

John Stossel posted another good column today about gas prices:

Let the market do its job

By John Stossel



Sep 28, 2005



Co-anchor, 20/20





"It's going to be a catastrophe!"



So I keep hearing.



The damage from hurricanes Rita and Katrina will send gas prices through the roof and destroy the economy!



"It's inevitable that this is just the beginning, it's not the end, of this gasoline crisis!" Sen. Charles Schumer told me, as Rita approached last Friday. The New York Democrat went on to say that we're "twiddling our thumbs while Rome burns ... we are weakened in every way!"



He is eager to spend your money to cure his panic. Schumer wants a new "Manhattan Project" that would use huge amounts of your money to fund "independent energy sources." I reminded him that the last time government tried that, it wasted billions on the totally failed synfuels project. Schumer said that was a failure because "political leaders" chose synfuels, but this time Congress would have "non-politicians" decide what projects to fund.



Sure they would.



If non-politicians are going to decide what projects to fund, why do we need Chuck Schumer? We already have a system in which non-politicians decide what projects to fund. It's called "the market."



If the price of a barrel of oil stays above $50, lots of entrepreneurs will scramble for ways to supply cheaper energy. They'll come up with alternative energy sources or better ways to get oil out of the ground. At $50 a barrel, it's even profitable to recover oil that's stuck in the tar sands in Alberta, Canada. As Peter Huber points out in his book, "The Bottomless Well," the Athabasca tar sands alone contain enough oil to meet our needs for 100 years.



But Schumer and other politicians don't trust the market.



After Hurricane Katrina, he and Sen. John Corzine, Democrat of New Jersey, invited reporters to a gas station where they said gas prices were rising not because demand exceeded supply, but because oil sellers are doing something fishy.



"Up 50 cents one day, down 25 cents the next, then up another 30!" Schumer told the cameras. "Something's wrong with the market!"



Something's wrong with the market? I'd think "up 50 cents one day and down 25 the next" shows the market working very efficiently. The oil business is hugely competitive. Gas station profit margins are paper-thin. Station managers have to adjust prices constantly to keep from losing business to a station down the block. Any of us can see the posted prices without even having to leave our cars, and people often drive blocks just to save a penny.



Despite Schumer's complaints about "catastrophe," today's gas prices aren't especially high. Even after the price increases of recent years, and after the high gas taxes imposed by our bloated government, today's price ($2.75, for regular, according to the AAA) is still lower than it was in 1981 ($2.86, adjusted for inflation). The politicians won't tell you that, and neither will most of the media. When they rant about "record" gas prices, they usually forget to adjust for inflation.



Fox News' Bill O'Reilly last week also ridiculed the idea that competition sets gas prices. On his popular TV show, he said, "Somebody tells your local gas station owner exactly what to charge! Somebody does that!"



Really? There's a secret price dictator?



Why don't people trust the market? Schumer thinks congressionally appointed "experts" are the answer, but imagine how much gas would cost if the government produced it! At least $20 a gallon. Gasoline isn't easy to make.



First, the oil has to be found, then sucked out of the ground ... sometimes from deep beneath an ocean. The drill may have to bend 90 degrees, dig sideways and bend down again, sometimes drilling through 5 miles of earth. What they finally<

 

[TrainTrac]

Dangerous Demagoguery

By Jack Rafuse



It's no secret that Hurricane Katrina did awful damage to the Gulf Coast region and the US energy infrastructure in the Gulf. A lesser known casualty of the storm has been the thinking of many politicians and pundits. Some of them are now calling for destructive economic policies such as price controls and time-wasting initiatives such as investigations into allegations of profiteering.



With Hurricane Rita bearing down on the Gulf today, let's review some of the facts surrounding Katrina and energy prices to understand what's happened and what we should be doing - and not doing - in response.



In the year before the Katrina hit, gasoline prices rose $0.50 per gallon, and politicians and reporters remained calm. They knew the rise was due to many factors, including booming Chinese, Indian and world-wide demand; lack of excess production capacity; rising US crude oil inventories; US refineries running at peak capacity; uncertainty about Iran, Iraq and Venezuela; high US summer demand; and other causes. But there was no "crisis." Logic and calm prevailed.



Then the storm smashed the US energy infrastructure as badly as it damaged cities, homes and lives. Consider the following facts, available at www.eia.doe.gov:



--The US uses 21.3 million 42-gallon barrels of oil a day (21.3MMBD);

--The US uses 11MMBD of the 21.3 as gasoline.

--The US produces 5.5MMBD (1.6MMBD from thousands of platforms in the Gulf of Mexico).

Katrina shut down hundreds of platforms and cut 0.9MMBD of supply - 60% of Gulf

Offshore production.

--Many damaged platforms are now producing; it will be weeks before all are at full capacity.

--The oil moves through undersea pipelines to Gulf Coast refineries; other pipelines distribute

crude oil and petroleum product around the country.

--Some pipelines were damaged and must be repaired.

--US refining capacity is 17.0MMBD; 8.1MMBD (47.4%) in the Gulf Coast Region.

--Katrina left six refineries damaged, flooded and without electricity. Four are now running;

two (5% of US refining capacity) will be out for several weeks.

--The US imports 10.8MMBD of crude oil (refined products make up the difference.)

--The Louisiana Offshore Oil Port (LOOP) which brings in 0.9MMBD was evacuated and shut

down as Katrina neared.

--Another 2.6MMBD that comes through Gulf Coast ports was cut off completely for about a

week.

--It will be weeks before those facilities can move pre-Katrina volumes; repairs will cost

hundreds of millions of dollars.



So at the height of the summer driving season, Katrina shut down platforms producing one-sixth of US domestic oil production; and LOOP, which throughputs 30% of US oil imports. She damaged handling facilities and refineries that process almost one-half of our domestic and foreign oil; and the tank farms and pipelines that move most of that oil and gasoline to the US Northeast and Midwest.



This damage compounded the "non-crisis" causes. The result was that the world price of crude oil topped $70 per barrel for a short while. The US average price of gasoline hit $3.05 by September 1 -- up $0.70 from August 1 and $1.20 from year-earlier levels (although as facilities come on, prices have begun to drop).



Politicians and journalists who understood and explained earlier gasoline price hikes totaling $0.50 suddenly found it incomprehensible that anything could increase prices by another $0.70. They saw no connection among Katrina, the damage, supply cutoffs and the price increase.



They knew that prices rose since 2004 because of supply and demand in a world market; they should figure out that losing 16% of US crude oil production could cut US and world crude oil supply and raise prices.



They knew that US refineries had been at full capacity f