When the average price of a gallon of regular gasoline peaked at $3.07 recently, it was partly because the nation's refineries were getting an estimated 99 cents on each gallon sold. That was more than three times the amount they earned a year ago when regular unleaded was selling for $1.87.
The companies that pump oil from the ground swept in an additional 47 cents on each gallon, a 46 percent jump over the same period.
If motorists are the big losers in the spectacular run-up in gas prices, the companies that produce the oil and turn it into gasoline are the clear winners. By contrast, the truckers who transport gasoline, the companies that operate pipelines and the gas station owners have profited far less.
"They obviously are experiencing windfall or excess profits," Dorgan said of the big oil companies. "They are . . . profiting in an extraordinary way at the expense of the American consumer."
For a company like Exxon, producing a barrel of oil from an existing well costs about $20, according to analysts. When the selling price rises above that, the increase is almost all profit, they said. After Katrina bore down on the Gulf Coast, the price of oil set a new high, approaching $70.
Refiners processing the oil into gasoline faced lucrative market conditions. They may have had to pay the producers more for the oil, but they were able to sell their gasoline for higher prices as a result of the short supply and the spike on the mercantile exchange. In their view, the increases were justified because the market dictated that their final product -- gasoline -- had risen in value.
Refiners, particularly those with most of their facilities outside the path of Katrina, cashed in. Analysts predicted a windfall for companies such as Philadelphia-based Sunoco Inc., which continued operating normally during the hurricane.
I wonder if this greed falls under the RICO Act? Come to think about it, maybe the White House cabal does too.
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