Very generous of you, IMO.
Just got gas at 3.559...
- Thread starter Damocles
- Start date
Very generous of you, IMO.
No deflection. Just truth and fact. Two things democrats cannot handle.
Poor Anchovies.
Tbird19482
Verified User
Well Trump may be finally doing something right
He is finally calling on the DOJ to look into price gouging by the big oil companies.
It is about time.
Maybe we can get gas prices down.
He is finally calling on the DOJ to look into price gouging by the big oil companies.
It is about time.
Maybe we can get gas prices down.
Gas is already going down.
Tbird19482
Verified User
It may be but tat doesn't mean the oil companies aren't price gouging does it?
Sell your car. Buy a horse. Support a local farmer.
Tbird19482
Verified User
And what is that going to do to stop the oil companies from gouging the American people?
It'll make you less of a hypocrite, IMO.
Have US oil companies been gouging the consumer this year?
No, not in the classic sense of arbitrary profiteering disconnected from market fundamentals—though high profits and lagged price adjustments have fueled accusations amid a major geopolitical supply shock.
Context: The 2026 Iran Conflict Shock
Early 2026 saw US-Israel actions against Iran disrupt the Strait of Hormuz (handling ~20% of global oil), spiking crude prices (Brent hit ~$100+/barrel from lower levels) and gasoline.
US national average gas prices rose sharply—from around $3.00–$3.10 earlier to peaks near $4.50–$4.60 in May, with some areas higher (e.g., California ~$5.50+ due to taxes, regulations, and refinery issues).
This was a classic supply disruption: reduced Middle East exports tightened global product markets, boosting refinery crack spreads (the margin between crude input costs and product values like gasoline/diesel) to elevated levels—often $30–$50+/barrel in spots, well above historical norms (~$10–$20 in calmer periods).
Oil Company Profits and "Windfalls"
- Major firms (ExxonMobil, Chevron, etc.) reported strong results tied to higher prices, with analyses estimating tens of billions in "excess" or windfall profits in the first months of the conflict.
- Q1 2026 earnings showed some reported declines due to timing/disruptions (e.g., Exxon ~$4.2B net, down from prior year; Chevron ~$2.2B), but adjusted/underlying figures and forward expectations were robust, with analysts projecting strong full-year gains.
- Refiners benefited especially from high crack spreads amid tight product supply. Companies returned cash via dividends/buybacks.
Critics (politicians, advocacy groups) called this gouging, arguing firms raised pump prices faster than costs and were slow to lower them. Similar rhetoric appeared in past spikes (e.g., post-Ukraine 2022).
Market Realities vs. Gouging Claims
Gasoline prices are not directly set by oil companies at the pump in a cartel-like way.
Breakdown (EIA typical):
- Crude oil: ~50-60% of retail price.
- Refining costs/profits: 15-25% (varies with crack spreads).
- Distribution/marketing: ~10-15%.
- Taxes: 10-20%+ (federal + state; higher in CA, etc.).
Key points:
- Global crude pricing: US producers/refiners respond to international benchmarks. Disruptions raise costs everywhere; domestic firms capture higher realizations.
- Lags and stickiness: Retail prices often rise quickly with crude but fall slower (due to inventory, contracts, competition, and local factors). Recent Trump accusations (late June 2026) highlight this as crude eased post-de-escalation (~36% drop from May peaks) while pump prices (~$3.90–$4.05 national average) lagged.
- Refining margins: Elevated due to real tightness (Hormuz, exports, utilization rates), not just opportunism. Goldman Sachs and others forecasted sustained high margins through 2026 from product supply crunches.
- US is a major producer (~13+ million bpd) and net exporter of products, but still tied to global markets and vulnerable to imports/refining constraints.
No widespread evidence of illegal collusion or withholding supply beyond market responses. Investigations (DOJ probes floated) would need to prove manipulation, which is rare in competitive global commodities.
High profits in tight markets are standard capitalism—rewarding supply amid scarcity.
Bottom Line
Consumers faced real pain from higher prices driven by geopolitics and refining dynamics, with companies profiting handsomely (as in past crises).
This isn't "gouging" in the sense of fabricated scarcity or pure greed overriding costs—it's how volatile commodity markets work when supply shocks hit.
Relief came as tensions eased and prices adjusted downward, though lags and regional factors (taxes, regulations) persist. Long-term, more production, refining capacity, and diverse supply reduce vulnerability.