Aug 7, 2006
Gas prices continue to skyrocket, ever upward. Workers have been robbed who don’t have another way to get to work or to get out of the city for a little vacation.
Economists and journalists give all kinds of reasons for high oil prices: sustained world economic growth, the crisis in the Middle East, the war in Iraq, the “threat” of war in Iran or North Korea – even a tropical storm that never developed! And they solemnly tell us that we’d better get used to a society where oil will be more expensive. Only they don’t bother to give us the main reason for the high price of gas: the profits of the oil companies.
Exxon-Mobil, the biggest oil company in the world, just posted its second quarter profits. Sales were 99 billion dollars, over one billion dollars a day! That led to a profit of 10.3 billion dollars, an increase of 35.6% over a year ago. Profits are almost double what they were in 2004. Chevron, the number two U.S. oil company, had 4.4 billion dollars in profits, and ConocoPhillips, number three, had still higher profits, five billion dollars. The head of James Investment Research based in Xenia, Ohio, which owns 54,500 Exxon-Mobil shares, said, “earnings have just been spectacular.” He added, “Cash flow is going gangbusters.”
The oil companies aren’t simply responding to the supposed laws of supply and demand. Their average margin for processing oil into gas and diesel widened by 41% to $16 a barrel. They are extracting record profits at every step along the oil production chain.
Even the devastation of the Katrina and Rita hurricanes, which hit Gulf of Mexico oil rigs hard, caused little problem for the oil giants. Chevron spent 300 million dollars in repairs – a small matter for it – and nevertheless had record profits.
For years, the oil corporations didn’t invest in exploration or the development of new fields, they didn’t construct new refineries and didn’t develop alternate fuels. Their problem wasn’t to respond to the need for fuel, but to increase their profits. The dictatorship of the capitalist corporations – with oil companies a good example – weighs down on the whole population.