Friday, September 23, 2005

Brian Schweitzer and other governors smell a rat

That good 'ol free market system manages itself.

How many times have we heard that bromide?

Unfortunately, far more times than we have heard of the various HealthSouth, Tyco, Enron, Adelphia,, Halliburton, etc. economic scandals where we cynically surmise that the free market was JUST ABOUT to step in and take control right before all those respective hells broke lose.

Yes, there are those ghouls who live to profit from the hardship and misery of others. Many are currently descending on the Gulf Coast.

But sometimes it not just the amoral individual doing such nasty deeds. Sometimes, it is a cabal at work utilizing precise and heartless decision-making

Congratulations to the appointed officals mentioned in the following article. Nothing will come of the call for a governmental investigation but at least we know where these officials stand.
Gov. joins call for gas price probe By The Associated Press - 09/21/2005

Gov. Brian Schweitzer and seven other Democratic governors are asking Congress to investigate possible gasoline-price gouging in the wake of Hurricane Katrina, and refund any ill-gotten profits to consumers.

The letter, sent to the Bush administration, cited a study by University of Wisconsin-Madison economist Don Nichols that found the hurricane was not fully to blame for high gasoline prices. The study estimated that for pump prices to reach $3 a gallon, the price of crude oil would have to be about $95 a barrel. Prices for crude have been holding at around $65 a barrel.

Ten refineries were knocked out by Katrina but Nichols said windfall profits are still involved.

‘‘Somebody is sitting on money they didn't earn,'' he said, ‘‘because they were in the right place at the right time.''

Ed Murphy of the Washington D.C.-based American Petroleum Institute said refining capacity was tight before Katrina hit and that it was reduced further by the storm. ‘‘That put upward pessure on petroleum prices,'' he said. ‘‘It's a no-brainer.''

Historically, Nichols said, the markup between the price of a gallon of crude and a gallon of gasoline is about 85 to 90 cents a gallon including refining, distribution and taxes.

At $50 for a 44-gallon barrel of crude, he said, the pump price should be about $2 a gallon, a little more or less in some states depending on taxes. At $65 a barrel — nearly identical to the price in Tuesday afternoon trading — a gallon should be about $2.30.

But as of Monday, the average cost of a gallon of regular was $2.78 nationwide. A week ago, it was $2.95 a gallon.

In Montana, the average cost of a gallon of regular gasoline was $2.82, 31 cents higher than a month ago, according to AAA MountainWest.

Jim Rink, a spokesman for AAA, said many factors influence the price of gasoline, such as state taxes and retailers who raise prices to drive down demand and preserve low inventories. The automobile association spokesman said he would rather see different state attorneys general or the Federal Trade Commission start an investigation.

Besides Schweitzer, governors signing the letter were Jim Doyle of Wisconsin, Rod Blagojevich of Illinois; Jennifer Granholm of Michigan; Christine Gregoire of Washington; Ted Kulongoski of Oregon; Bill Richardson of New Mexico; and Tom Vilsack of Iowa.

For the rest of the article, go here.


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