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Shock Big Oil

Don't let oil companies profit from hurricane Katrina

Sep 4, 2005

Since hurricane Katrina hit the U.S., the price of gasoline has skyrocketed 50-75 cents in many places. There may be shortages of gasoline in the area of Katrina's destruction. But what justifies the price jumps, so high and so fast, in other areas of the U.S.? Nothing.

Oil companies maintain inventories of gasoline. Oil is bought with futures contracts. Oil speculators may trade futures and bid up the spot price of oil, some winning, some losing; but oil companies know the market and use futures precisely to avoid having to buy oil at the spot price. Only several months of constrained supply would cause the average wholesale cost of oil to rise. By then most downed facilities will be operating, or gas shipments from other sources will be arranged.

At a time when oil companies are already reaping huge profits---Exxon earned about $8B in just the last quarter of one year---they are poised to profit even more from Katrina by price gouging the whole country, spreading fear of oil shortages to boost prices.

Arguments that oil companies will need more income to repair damaged oil refineries and rigs are unfounded. The cost will be a small fraction of the industry's current cash horde, and well within their income stream at pre Katrina gas prices.

Here is my suggestion to fight back. Let's all try to cut back on gasoline use by 10% for the next 3 months. Let's plan our car use better; consolidate trips whenever possible; carpool to work; pile into one car when going out with friends; take the bus; walk; stay home. Whatever you can do will help. You'll save some money, too. If Americans reduce their gas consumption by 5-10% for three months, the price of gas will come tumbling down.

How do we get all of America to join in? Copy this letter (cut & paste from Syracuse.com) and email it to your friends, and have them email it to their friends. Let's give it a try. Teach big oil a lesson, and experience one yourself about the power of the people in a democracy.

Carlo Moneti
Syracuse, NY