Gas Prices Are Driven by Greed

The average price of a gallon of gasoline in the United States is now $2.55, the highest in six months according to a nationwide survey of gas stations.[1] The analyst quoted in the cited CNN story blames a dip in supply caused by an unusual amount of refinery maintenance for the rising prices.

An interesting excuse when you consider that oil companies have continued to report record annual profits[2], and that the 26 oil/gas industry CEOs identified by Forbes make an average annual salary of $17 million, with the highest paid taking home nearly $81 million annually and $198 million over five years.[3] In 2005 oil CEOs took home 518 times the average pay of their workers, and took raises in salary for themselves that averaged 50%, while giving their employees raises averaging only about 4%.[4]

So Big Oil makes annual profits of hundreds of billions of dollars and seemingly has nothing better to spend it on than exorbitant compensation for its bosses (the money certainly isn't being spent on the employees), yet when the refineries shut down for repairs a little too often or crude prices go up over $60 a barrel, the barons have no choice but to pass the cost onto us hapless consumers. Doesn't that sound perfectly reasonable to you?

Refinery maintenance might well be causing a drop in supply, and anyone who occasionally glances at the front of the business section in USA Today can tell you that crude prices have been high for the last few years, but neither of those is the reason for our rising gas prices. The real reason is greed.

I worked as a janitor for the Pilot Travel Center here in Hagerstown for five years. My last full year there my annual wages just barely made it over $20,000. Jimmy Haslam, the founder and president of the company, owns a private jet and is good buddies with the mayor of Knoxville, TN, where the corporate headquarters is located. Two years ago, when the price of gas and diesel had risen so high that it was starting to affect our business, Jimmy sent a few of his loyal bootlicks around to see what the problem was. John, our general manager, explained that we were pumping far below our average, that the cost was so high people just weren't buying as much fuel. The boys from corporate scratched their chins, really mulled the situation over, and finally declared, "Drop the price by two pennies."

It was part of my job to change the prices on the big sign out front, so when they ordered the price lowered I grabbed my extendable aluminum pole and plastic numbers, went out and dropped our gas and diesel prices by two cents. It didn't work like the fellows from corporate hoped it would-gas was up over $3 a gallon around here back then-but I have never forgotten their generosity.

[1] "Gas prices rise 20 cents to $2.55 a gallon," CNNMoney.com, 3/12/2007

(http://money.cnn.com/2007/03/11/news/economy/bc.energy.gasoline.retail.reut/index.htm?postversion=2007031121)

[2] "Exxon and Shell Report Record Profits for 2006," New York Times, 2/1/2007

(http://www.nytimes.com/2007/02/02/business/02oil.html?ex=1328072400&en=08a4aef44d86ae08&ei=5088&partner=rssnyt&emc=rss)

[3] "Forbes List: Salaries of Oil and Gas Operations CEOs," Forbes.com

(http://www.forbes.com/lists/2006/12/Oil_Gas_Operations_Rank_1.html)

[4] "Executive Excess 2006: Defense and Oil Executives Cash in on Conflict," pp. 19-20, Institute for Policy Studies / United for a Fair Economy

(http://www.faireconomy.org/reports/2006/ExecutiveExcess2006.pdf)