George D. Porter – 2/13/09

This page was last updated on February 15, 2009.

Oil companies are still gouging us; George D. Porter; Beaver County Times; February 13, 2009.

Below is a detailed critique of the subject letter.

“Rising fuel prices in 2007 and 2008 pinched our economy and took our ability to feed and clothe our families away.”

[RWC] Nothing like hyperbole, is there? As someone who worked for an evil multinational oil company for 23 years, I never cease to be both amused and frustrated with the large number of people who think as Mr. Porter.

“The accompanying price rises in so many sectors began the pressure spiral that fueled mortgage failures, which put added stress on an economic community that was already in turmoil.”

[RWC] I have to admit this is the first time I’ve seen someone blame the bad mortgages on energy prices.

Mr. Porter appears to claim we had “an economic community that was already in turmoil” before the mortgage mess. Since the economy was going great guns until the mortgage mess [Employment grew for 52 consecutive months (9/03 - 12/07) adding more than 8.3 million jobs and GDP grew in every quarter from the fourth quarter of 2001 through the third quarter of 2007.], Mr. Porter’s assertion appears not to be supported by the facts.

“In the face of this, the top five oil companies made record profits, and there were hearings in Congress about their pricing policies. The resultant slaps on the wrists did little or nothing to their pricing attitudes.”

[RWC] What “slaps on the wrists?” The oil companies didn’t do anything wrong.

“Once again, oil companies in general, and Exxon particularly, have shown a new financial record for profits, this in spite of the fact that oil prices and subsequently gasoline prices fell to 18-month lows in the fourth quarter of 2008.

“So in the middle of winter with demand not really increasing significantly, we see gasoline prices on the rise again.”

[RWC] This appears to be a guess on Mr. Porter’s part. If Mr. Porter had checked the DOE’s EIA website, he would have seen gasoline demand has been increasing (It’s higher than in late September/early October.) and is nearly at the same level as a year ago when prices were about a dollar per gallon higher.

A lot of things can cause price fluctuations and I don’t know what’s in the latest changes. In any case, has Mr. Porter heard of home heating oil? We’ve had a pretty cold winter and this drives up demand. Since both heating oil and gasoline come from the same barrel of crude oil, could it be increased demand for heating oil cut gasoline supplies? I don’t know if this is the case or not. My point is to show a lot of things can affect gasoline prices, not just gasoline demand. Finally, remember the oil market is a worldwide market. Prices somewhere halfway around the world can affect local prices.

“With our focus on the financial markets, the big oil companies are going to take this opportunity to pad their profits because Congress has its focus in other areas, much like the 7-year-old does while the store owner has his focus on more important matters.”

[RWC] I’m confused. Above didn’t Mr. Porter tell us attention by Congress “did little or nothing?” Therefore, what difference would it make if “Congress has its focus in other areas?”