Ben Stein on High Oil and Gas Prices

Michael Giberson

So, the mob goes after someone to lynch, even if that person is innocent. After all, as the immortal Bob Dylan sang long ago, “A lot of people have knives and forks, and they don’t have nothing on their plates, and they have to cut something.”

This comes to mind because of the recent actions in the U.S. Senate that attempt to “crack down” on energy companies because the price of oil is so much higher than it used to be and because one large oil concern, Exxon (XOM), is reporting very large profits (after many years of modest earnings).

That’s Ben Stein on Who’s to Blame for High Oil and Gas Prices?


10 thoughts on “Ben Stein on High Oil and Gas Prices

  1. From the Detroit News today (3/21) in respect to rising gas prices:

    “Cuts in production at several Midwestern refineries have played a role. BP reportedly slashed output by 10 percent to 15 percent to boost profit margins at its Whiting, Ind., refinery, and the region’s largest. Valero Energy Corp. cut output by more than 10 percent at its facility in Lima, Ohio. Fuel from both refineries is distributed in Michigan.”

    So why are the companies not at least partially to blame?

  2. From the Detroit News today (3/21) in respect to rising gas prices:

    “Cuts in production at several Midwestern refineries have played a role. BP reportedly slashed output by 10 percent to 15 percent to boost profit margins at its Whiting, Ind., refinery, and the region’s largest. Valero Energy Corp. cut output by more than 10 percent at its facility in Lima, Ohio. Fuel from both refineries is distributed in Michigan.”

    So why are the companies not at least partially to blame?

  3. Lima refinery on list for Valero maintenance

    SAN ANTONIO, Texas – Valero Energy Corp., the largest U.S. oil refiner, said it plans maintenance at 12 of its 18 refineries this year, temporarily slowing fuel production.

    “Valero operates 16 refineries in the United States with capacity to process about 2.34 million barrels of oil a day, or almost 14 percent of the nation’s total.

    The plans include the company’s Lima, Ohio, facility, where a 26-day project is to begin in the third or fourth quarter.

    The work originally was scheduled for March.”

    It is reasonable to assume that if the refinery experienced problems because of a lack of required maintenance, Valero would also be responsible.

    In addition, I did not realize that private companies were required (expected) to sacrifice profit margins to hold prices down.

  4. Blame for what? Making profits? That is cause for commendation, not blame.

    However, cutting production levels at the prices currently being paid for gas might make one think that an oil company would make less, not more money. You sure the Detroit News is qualified to make managerial decisions for BP and Valero?

    JBP

  5. Blame for what? Making profits? That is cause for commendation, not blame.

    However, cutting production levels at the prices currently being paid for gas might make one think that an oil company would make less, not more money. You sure the Detroit News is qualified to make managerial decisions for BP and Valero?

    JBP

  6. Perhaps their Whiting refinery was running over sustainable long-term capacity (by which I mean the plants are more efficient at something under 100% of actual capacity, so you can do maintenance and put less stress on the system), and it’s cheaper to operate at a lower level, thus making the overall operation more profitable with less production?

    (Markets, especially combined with very complex industrial infrastructure, are not always such that more production makes more money; and BP’s job is to make money, not to produce the maximum possible amount of fuel, even if it makes them less money.)

    Beats me, but then I know just as much as the guy at the Detroit News who has only “reportedly” to back that up. Who reported it? Obviously not BP, or he wouldn’t have needed to say “reportedly”.

  7. Perhaps their Whiting refinery was running over sustainable long-term capacity (by which I mean the plants are more efficient at something under 100% of actual capacity, so you can do maintenance and put less stress on the system), and it’s cheaper to operate at a lower level, thus making the overall operation more profitable with less production?

    (Markets, especially combined with very complex industrial infrastructure, are not always such that more production makes more money; and BP’s job is to make money, not to produce the maximum possible amount of fuel, even if it makes them less money.)

    Beats me, but then I know just as much as the guy at the Detroit News who has only “reportedly” to back that up. Who reported it? Obviously not BP, or he wouldn’t have needed to say “reportedly”.

  8. I’m with Ed– private companies shouldn’t have to sacrifice their profits just to keep prices down.

    Let’s also keep in mind that punishing U.S. oil companies for making money ends up giving foreign companies an advantage and limiting our energy supplies. Regulation like that is only going to make Americans more susceptible to price spikes.

  9. The truth is that American oil companies already operate in an incredibly tough environment. Their global competition is predominately made up of (foreign) government owned companies. I don’t think making a profit in that kind of a landscape is cause for derision, it should be cause for celebration!

  10. The truth is that American oil companies already operate in an incredibly tough environment. Their global competition is predominately made up of (foreign) government owned companies. I don’t think making a profit in that kind of a landscape is cause for derision, it should be cause for celebration!

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