Gas Face Nominee Profile: Oil companies
May 14, 2008 by Tisa Silver
Filed under Finance
ExxonMobil, ChevronTexaco, BP Amoco just to name a few. We’ve all seen the record profits as of late, but does that make them most deserving of the gas face?
No doubt, the price of oil makes the largest contribution to the gas prices we see at the pumps. But, many transactions are involved in the process of converting oil to gas.
Oil companies produce and sell crude oil to refiners. Refiners transform crude oil into gasoline. Refiners sell gasoline to distributors. Distributors sell and deliver gasoline to retailers. Finally, retailers sell gasoline to consumers. Whew, that’s many middlemen!
The goal of each middleman is to realize a gain. From what we see, it appears oil companies have gained the most. For the first quarter of this year, ExxonMobil and Chevron reported profits of $10.7 billion and $5.17 billion, respectively. Shares of ExxonMobil actually dropped on news of their profits because investors expected more!
The presence of so many intermediaries makes it difficult to pinpoint the most deserving gas face recipient in this category. The fact that some oil companies are also involved in refining, distribution and retail clouds the picture even further. What’s clear is that oil companies are involved in virtually every step of the process- a process that must be flawed when a $10 billion profit is too small.
Now Congress is questioning oil execs and candidates are creating holidays…which leads to our fourth and final nominee: the U.S. government.
Have any “gas face” worthy tidbits to include?
Leave a comment and cast your vote for “Who gets the gas face” now!
Oil companies are a easy target for criticism about high gas prices. People complain about high gas prices but still buy the gas. Why should the oil companies lower their prices when people will pay over $3 a gallon? They are not non-profits and shouldnt be expected to minimize their revenue. It’s up to the government/private researchers to find effective alternative energy sources.