There is no doubt that prices have increased because of Vladimir Putin’s illegal, unprovoked invasion of Ukraine has caused damage to both energy and food markets. And there’s no doubt that prices have increased because supply lines, hollowed out by years of “lean” philosophy among manufacturers, collapsed under the stress created by the pandemic. And there’s absolutely no doubt that prices are increasing because corporations are taking advantage of this moment to indulge in gouging consumers.
A prime example of that last cause for inflation can be found in the latest earning reports from oil giants Shell, Chevron, and Exxon. As The Wall Street Journal reports, all three companies racked up record profits in the second quarter of 2022, banking a combined $46 billion as consumers suffered from higher prices. For the largest U.S. oil company, Exxon, that’s a 400% in profit from the same quarter last year.
As President Joe Biden has noted, gas prices have now fallen for six weeks in a row. However, the price at the pump is still well above where it should be when compared to the price of oil. Where is that gap between the price of oil and the price of gasoline going? Right into oil companies’ pockets.
Current prices for oil are running just under $100 per barrel, which is absolutely high. However, it’s less than the price of oil in 2014, or 2013, or 2011. In fact, oil prices actually reached their record high in 2008, when those prices topped $140.
But gas prices in 2008 peaked at $4.10 per gallon. In 2014, which is the last time oil prices are where they are now, the price of gas averaged $3.50. At no point in the period between 2011 and 2015 did gas prices exceed an average of $3.92, even though oil was frequently well above $100 and topped out around $113.
Average weekly oil prices topped out around $115 in May, but gas prices this time around climbed to record highs. Not only did gas prices go up more, and go up more quickly, than with previous spikes in the price of oil; as oil prices have dropped, gas prices have been much slower to come back down.
The way that oil companies have continued to milk all the hype over inflation to generate a fat wave of profit has not gone unnoticed.
White House chart showing relationship of oil prices and gasoline prices.
But of course, that hasn’t stopped Republicans from insisting that inflation can be blamed on President Joe Biden, while they’ve insisted on protecting the oil companies and increasing federal giveaways to fossil fuel. Maybe that’s because the oil companies give over three times as much money directly to Republican candidates for Congress, which doesn’t even include the money that is funnel through PACS.
Considering the profits these companies are pocketing, their investment in Republican politicians cost them peanuts.
