Annual Whack An Oil Industry Exec Hearings Underway

This time, it's Sen. Chuck Schumer (D-NY) who's leading the annual charge against oil companies. He thinks that they're monopolies and need to be busted up.

Oil companies have grown too big and powerful, and it may be time for a new trust-buster in the mold of Teddy Roosevelt to break up the monopolies, Sen. Charles Schumer, D-N.Y., said Wednesday at a congressional hearing.

"America's families are getting a raw deal, while oil companies make out like the robber barons of Roosevelt's time," Schumer said, as he opened a hearing into the oil companies' market power at the congressional Joint Economic Committee.

"It isn't clear that we have anything that can be remotely called competition," said Schumer, chairman of the committee. If there were competition, "wouldn't these companies be investing in new production rather than sending back the oligopolistic profits back to shareholders? He said ExxonMobil, for instance, had spent $29 billion in share repurchases last year and just $20 billion in investing in production.

Going after oil companies makes for good soundbites and people love to hate the oil companies because the price of gasoline is at record levels. However, making such statements ignores the facts, and why would Schumer want to let facts get in the way of a good rant.

Consider that once upon a time the price of oil hit $11 per barrel. Gasoline was under $1 a gallon. There weren't claims of monopolistic price gouging or other inane claims of price fixing when the oil companies were hurting because they could barely squeeze a profit. If there was a time for them to try and fix prices, it was when they were extremely low and they would benefit from pushing the price upwards.

Oil companies weren't doing well back then, but the price has gone up steadily because of one primary factor from which all others flow - supply and demand.

There is simply more demand than there is supply. Supply is limited because oil-producing countries may be having issues, like Nigeria or Iraq or Venezuela or Iran. Refineries are another bottleneck causing an increase in prices and no new refineries have been built in decades because of onerous regulations. More people are in need of petroleum products - from China and India, to the millions of American drivers who are driving more - than ever before. More demand means that supplies dwindle and the price goes up.

As I've previously noted, how about Schumer and other demogogues should hold hearings about the high and onerous taxes imposed if they're truly that interested in lowering the price of gasoline. The taxes make up a far greater share of the price of a gallon of gasoline than the oil companies make, and yet the oil companies are the bad guys?

Schumer really needs to buy a clue.

Meanwhile, the House has approved a measure that would impose fines for price gouging. Good luck trying to find price gouging considering that there's no evidence that it even exists in the oil/gas industry. High prices, in and of themselves, is not an indication of gouging.

All these measures do is let politicians claim that they're doing something about a problem, when there is no such fix.