One of the advantages to my new dear-god-that's-early work schedule is that I get to watch the good half of the Today show... the actual news stories and interviews with political figures, rather than the cooking segments and fashion shows.
Yesterday, Katie interviewed Bill Frist (Senate Majority Leader) and today, Matt interviewed Rex Tillerson (CEO, ExxonMobil) about gas prices. Though both interviews were interesting, Katie & Matt kept probing the two men for short, quick answers and then later replayed sound bites out of context to make their answers seem to be something they weren't (shocking, I know).
People, there is no bumper sticker solution.
Yes, Sentaor Frist sounded like a wind-up parrot as he repeated "supply and demand Katie, supply and demand" ad nauseam, and yes, his $100 rebate is so ridiculous as to be laughable. But this is an exceedigly complex issue and everyone is too busy clamoring for a quick fix to understand the breadth and depth of it.
I have to applaud Rex Tillerson for having the courage to be interviewed on the Today Show, though I'm sure he knew what he was in for. (10 minutes of brilliant interview and the only sound bite that NBC replays is the one in which Tillerson says that his company is in the business of making money. Well, duh! Hello, free market economy) He brought up several important points:
Although oil companies are reporting record profits, only 30% of their profits come from U.S. sales. The rest are from international sales. These days? That's largely China.
Of those U.S. profits, only a small fraction are from gasoline sales; they make most of their money on the upstream, not from the pump.
Even after the merger, ExxonMobil controls only 8% of the gasoline market - a market in which competition is rapidly increasing.
After adjusting for inflation, gasoline is less expensive today than it was during the gas crisis in the 70s
Clearly the issue is not as simple as "record profits = price gouging and monopoly."
If prices at the pump rose in direct proportion to the price of crude oil, we'd all be paying $14 a gallon for gasoline.
Matt was skeptical when Tillerson said that the major oil companies are not getting together and fixing fuel prices, but ExxonMobil's CEO is absolutely correct. The Federal Trade Commission has an entire panel devoted to ferreting out price collusion in the oil industry and they have never ONCE found an instance of it. Ever.
I am tired of hearing about the people who have to hock their jewelry, or re-arrange their carpools, or take the desperate measure du jour to put gas in their cars. The fact is that in the American free market economy there will always be people on the margins. There will always be a segment of the population that is in debt to the last possible penny, who live at the absolute limit of their means. For them, a fifty cent raise in gas prices or a half percent raise in taxes, will upset their entire budget because they have left such a narrow margin for error.
We cannot regulate the economy based on that small percentage of the population. Besides, to play Devil's Advocate for a moment, there are some positives to our rapidly rising gas prices...
Environmentalists should be jumping for joy that fuel has gotten so expensive: cost is the only effective motivator in curbing consumption. People won't start carpooling because it's "bad" to waste gasoline; but they'll sure as hell do it if commuting solo starts to constrict their wallets.
Likewise anyone who has a mutual fund (if you have a 401K, you are invested in a mutual fund) should be thrilled with oil companies' rising profits: almost all of them involve an oil company.
That being said, you know what? There are two things that the federal government could do
right now to lower gas prices but nobody is talking about them.