I've seen a couple of diaries on this, but the responses to these diaries has been a bit tepid at worst, or filled with replies by gas industry apologiest at best. I thought I would do my best to iron this issue out a bit with some facts.
I live in what is considered the Greater Washington D.C. area. Like every other area, we've had our ups and downs with gasoline prices. Interestly enough, we had the lowest prices in the area when Exxon-Mobil had a station here. When that station was bought out by Sunoco (roughly a year ago), we didn't become the most expensive, but the competition suddenly evaporated, and we were no longer close to the lowest prices anymore. But I digress...
In mid to late April, prices reached $2.99 / gallon. This wasn't a big surprise, and according to the gas industry apologists, it was in line with the rising cost of crude oil. I disagree with that assessment as I am unaware of any other industry where when the COGS (Cost of Goods Sold) rise, so do profits. But I didn't argue too much because while I know prices didn't need to be that high, I couldn't pin down what price it could be and still provide profit to the gas companies.
That price ($2.99 / gallon) has stuck through the entire summer, and stayed there until a month ago. Prices didn't just go down, they dropped. Overnight, we were down to $2.79 / gallon...nothing to sneeze at. The next week, we were down to $2.69 / gallon. Then, almost two weeks ago, we dropped to $2.49 / gallon. Now, how in the world could we have dropped $.50 / gallon in a 2 week period? The gas industry apologists have clearly stated that crude oil prices (controlled by supply and demand) are the answers. So be it. Let's look at those crude oil prices.
First, so you can verify my statement of prices, although it doesn't show my specific neighborhood, you can still see the general trend for the area, and verify my dates here (select "District of Columbia, DC" for Area 1, "6 month" for Time Period and create chart for a better view).
Next, let's see what the crude oil prices have been. The DOE has a nice listing of the import prices we are paying for crude oil. Now that we have all the information, it's time for the math.
4/20/06: I started paying $2.999 / gallon at the pump (they like to change prices on Thursdays around here). Crude oil prices were $64 / barrel. I could go back earlier (to account for the time it takes the oil to go through the refining process, but it actually would make the case worse for the gas companies, not better).
9/1/06: I was (and still am) paying $2.499 / gallon at the pump. Crude oil prices were $63.18 / barrel. Prices got as high as nearly $70 / barrel between the dates...but are currently at about the same price they were in April.
Yes, I'm aware I put an extra 9 in the prices...that is for accuracy's sake. So, I'm paying about 17% less for a gallon of gas, but crude oil prices have not changed at all. And I'm supposed to believe that the upcoming election has nothing to do with it? Excuse me?
To make matters worse, let's look at crude oil prices 8 weeks prior to each of those dates to account for the time to ship and refine. On the week of 2/24/06, crude oil prices were $51.43 / barrel. On the week of 7/7/06, crude oil prices were $66.54 / barrel. That's right, crude oil prices have risen nearly 30%. We could use a longer timeframe (say 12 weeks), but the results would end up about the same. 30% rise in COGS, but paying 17% less at the pump isn't politics? If you believe this isn't a political favor, I have a bridge for sale in Alaska...
I'm certain some will respond with "You just don't understand...", but I think the gas apologists just don't understand. This is business. Just simply business. Do a favor for someone or some group today to get a better business deal later that will result in more money. I do know first hand about those kinds of deals...they may not have been national politics, but they have been in the name of company politics. Why do some people continue to think that company politics are all that different from national, state or regional politics?
Business is business. Money is money. Corporations exist to make money. Right now you are witnessing a political favor from the gas corporations in the hopes that they will see their "investment" returned to them multiple times over if their candidates can win.