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Crude Behavior hampers holiday shopping season

Crude Behavior hampers shopping season
The holiday shopping season is officially under way but there's an enormous "pink elephant" in the room (let's call her "CB" short for "crude behavior").

No, I'm not talking about the video of a man being wrestled to the ground for cutting a line at Wal-Mat.

Merchants like Wal-Mart (the nations largest retailer) are definitely more aggressive this year in wooing the bargain shoppers -- they need to be.

They kicked off the season especially early this year, with a "holiday ad campaign that rolled out Nov. 1 -- the earliest in the company's history."

The "pink elephant" in the room is the "rising energy prices" -- And all of the retailers are in a panic to front-load the shopping season -- before consumers get socked with winter heating bills, which are expected to run as much as 50 percent higher than a year ago.

Let me repeat that: 50 percent higher that a year ago (I'm feeling the breeze just thinking about it).

A "PINK ELEPHANT" PRIMER: The major oil companies are expected to earn $96 billion in profits this year -- and they don't plan on giving any of that money back.

Remember that staged Senate hearing where the oil giants defended their record $34 billion in summertime profits by saying Wall Street is twice as greedy.

I heard they even tried the O.J. Simpson defense saying they are "looking for the real killers." -- isn't that just crude behavior, but wait it gets worse.

Black Friday shoppers woke up early but they are cautious. One shopper noted in a news story that she plans to spend about $1,000 this year on Christmas gifts, half of what she spent last year.

"Everything's up, including the price of gas. I have to pay to heat my home," the woman said.

A recent edition of the PBS show "NOW" focused on the "Crude Behavior" from the major oil companies. In that story they said, "What is driving up the cost of driving? Critics say big oil companies push up prices by keeping a lid on how much gasoline gets refined."

CB (the enormous "Pink Elephant" everyone wants to ignore) is the major oil companies. And she's about to take a big shit on your head.

Prices are up 56% over the past two years. This has been great for stockholders of oil companies but it is killing lower-income people who have to drive a lot to work or for work.

Senator Ron Wyden said, "What they did is look at how to limit production in order to boost their profits-- not my words-- the words of the oil industry."

Here's a little bit from the actual transcript from the PBS "NOW" broadcast and investigator Maria Hinojosa:

MARIA HINOJOSA: Polls show that public opinion is blaming the big oil companies for these high prices ... and a NOW investigation has found the public has good reason. In fact, after reaching out to industry analysts, consumer advocates, members of Congress and whistle-blowers, we've found the industry has taken active steps to keep prices and profits at record highs.

JAMIE COURT:The reason they're making world-record profits is 'cause they're charging world-record prices for gasoline and heating oil that doesn't cost them world-record production costs to make.

: But the oil companies say, it isn't their fault they blame high crude prices - point fingers at destruction from Hurricanes Katrina and Rita - imply it might be your local gas dealer.

No way, says Tim Hamilton, who represents about 400 independent station owners in Washington state. He says his colleagues are getting squeezed - and the latest government figures back him up - on average, retailers took in only six cents of the two and a half dollars we paid per gallon.

TIM HAMILTON: If there's one sector of the economy that has been hurt worst by the price hike, it's the local gasoline dealer. But, unfortunately, due to an effort by the oil companies, and, a lack of understanding, they often get blamed for this. And it's not their fault.

MARIA HINOJOSA: Well, what about the hurricanes? Yes, Katrina and Rita did temporarily shut down a significant part of oil and gas production in the U.S. - and prices spiked. But look at this chart ... why were gas prices rising well before the hurricanes hit?

And what about the price of crude? Sure, it does account for about half the cost of gasoline. And when OPEC raises its price, the oil companies make plenty of money from the crude they produce themselves.

But look at this chart ... why did the price of gas increase three times as much as the price of crude in the month leading up to Katrina?

Jamie Court is a consumer advocate in Los Angeles who's been tracking the oil companies.

JAMIE COURT: In times of peak demand and low supply, they can charge $3 per gallon for gasoline, but the fact is it doesn't cost them more than a dollar-something to make that gasoline.

MARIA HINOJOSA: And the companies are making record profits. Only nine months into 2005,
Royal-Dutch Shell profits - 21 billion dollars;
British Petroleum - 15 billion;
Conoco Phillips - 10 billion;
Chevron - 10 billion.

And the most profitable company in the world by far, Exxon Mobil, just reported more than 25 billion dollars in profits for the first nine months of this year. In fact, in just this past quarter, Exxon had made three times the total profit Time-Warner made all of last year.

So, if the gas station owners... and the hurricanes... and the cost of crude don't account for all of the price hikes ... what else does?

JAMIE COURT:Oil companies have manipulated supply so that when there's-- gonna be a peak season of demand, they then withhold supply. And when there aren't adequate inventories, the system is rigged for a shortage, even though it's artificial.

Seasons Greetings from the oil companies (and stay warm, if you can afford it).

By Henry Cruz














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