Bashing the oil companies is all well and good, but I think one needs to bring the facts.
You can read this story from Business Week here.
Now the issue can be defined not only as obscene profit-taking at the expense of American consumers. It can also be portrayed as a conscious refusal to help Americans at the pump while still making money.
Exxon is the largest publicly traded company in the energy business. In fact, it's the most profitable company in the history of capitalism, earning a record $40.6 billion last year on sales of $404 billion. Yet even with crude oil prices near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year.
That means the company's oil output won't even keep pace with its own projections of worldwide oil demand growth of 1.3% a year.
Imagine a chief executive of another growth company making a similar announcement to that of Exxon Chairman Rex Tillerson. What if Steve Jobs said Apple (AAPL, news, msgs) wasn't going to sell any more iPhones than it did in 2007? What if Howard Schultz said latte production at Starbucks (SBUX, news, msgs) would stagnate, at least until the next U.S. president embarked on his or her re-election campaign? Shares of both companies would plummet.
In fact, the refusal to increase output will mean more value to shareholders. As the story points out, commodities are different animals.
But the issue is that Exxon makes record profits, would continue to make profits, and doesn't care what anyone thinks about it.
In fact:
Last year, ExxonMobil led the industry with a return on capital of 32%.
No one need be a wide-eyed socialist to attack Exxon's anti-Americanism, quite frankly. If they produced more oil, they would still make boatloads of money. This is about, to me, willful gouging.
Can that be further supported? IIRC, Counterpunch reported that the major oil companies share oil refineries in the U.S.
De facto, each knows what the other is pumping by knowing what volumes are available for them to refine.
Say, for example, Exxon told the refineries they were still on pace to need X amount refined. The refineries come back and say, well, we can't do X. We can do X-Y.
Thus it doesn't take a rocket scientist at Exxon to know someone else is demanding that capacity. Thus volume available to the consumer rises, and prices go down.
And it's probably a lot more clearer than that from trade news. Say, if Shell says it has increased production...and where will that increased production be refined? Then Exxon finds out there is a refinery capacity problem. Thus, Shell is going to pump more and the price will come down.
The problem is, given maximizing profit, that it is not in Exxon's or Shell's interest to do so and be forced to take a slightly less profit.
In a nutshell, from my perspective, you have collusion that cannot be proved in a court of law but could be proved in the court of public opinion.