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  • From: "Jerry W. Shepperd" <shepperd AT austincc.edu>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Oil demand rising faster than expected
  • Date: Thu, 14 Jun 2007 11:53:38 -0500

James,

Well said.

Jerry Shepperd


At 11:43 AM 6/14/2007, Clansgian AT wmconnect.com wrote:


> We little guys can do nothing about the global energy situation.

This I would emphasize by adding that whether gas prices are the result of a
depleting resouce or whether the evil oil compaines are just gouging the
consumer, it is little odds. There is STILL nothing we little guys can do.

Even if all the conspiracy flack were true, do you really think that there is
someone we could elect, some protest or boycot we could organize, that would
result in the oil companies saying, "Ah, eh, you got us. The gig is up. To
make it up to you, gas will now be 75 cents a gallon."

The truth is that oil companies are making record profits because we are
using a record amount of gas. Interestingly enough, one of the reasons, besides
being stupid and greedy, is ethanol. It takes a gallon and a half of ethanol
to equal the energy of one gallon of gasoline. So as more ethanol is added to
fhe fuel supply, the average mileage per gallon goes down and we buy more fuel.

But hype aside, how much do oil companies make in profit? The overall profit
for oil companies is 5.9 cents for every dollar of retail sales. The average
profit for all industries is 5.2 cents per dollar of sales. But wait! Oil
companies make more money on fuel oil, lubricants, and oil derivitives for
plastics than they do on gasoline. The average oil company profit on one gallon
of gas is 10 cents.

Let's suppose that the oil companies (that is, it's investors) chose to run
the business as nonprofit. How much better would you do if gas went from it's
current $3.15 a gallon to $3.05?

But oil companies aren't nonprofit. And this puts one really important
reality on the table. Oil companies are capitalists enterprises. That means oil
is explored, mined, transported, refined, and retailed using someone else's
money, someone else's risk, and not yours personally. Under such an arrangement
people are entitled to a profit. That money available to finance the oil
industry competes with every other industry that wants that money invested in its
own business. At the pump, you are outbidding all other industries for the
money it takes to run the oil industries.

When you shell out for gas at the pump, here is where the money goes:


Price of crude oil - 53%
Taxes - 18%
Dist & retailing 9%
Refining - 20%

Wait. Even if the price of crude goes up, why should refining and
distribution go up to match? Because every step of the process to get the oil from the
ground to the pump itself uses oil.

People, including congressional committees, have been looking into the notion
of price gouging for a very long time and have not found evidence of it. All
the gouging palaver boils down to the sneaky suspicion of "Ah ... ya never
know .... I bet they are making 50% or 75% profit on gas ... I just betcha!"

The only thing you have in your control is your personal consumption which is
not only the only thing that will make a difference to you personally, but it
is the only thing, colletively applied, that will ever change world fuel
problem. If gas suddenly went to $5 a gallon this summer, which it well may, we
could save ALL that money back simply by cancelling just one trip to town a
month.





  • Re: [Homestead] Oil demand rising faster than expected, Jerry W. Shepperd, 06/14/2007

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