May 19, 2001, 7:49AM

Sorry, but it doesn't work to blame 'Big Oil' By JERRY TAYLOR and PETER VanDOREN

With gasoline prices averaging $1.70 across the nation, Americans are suffering another conniption fit over "Big Oil." But the widespread conviction that oil monopolies are forever robbing us blind is little more than an urban myth.

For starters, if "Big Oil" companies are indeed behind this price spiral, why did they decide to gouge Californians (where prices are nearing $2 a gallon) and not, say, motorists in Atlanta (where prices are hovering around $1.50)? Do they just "have it in" for motorists in some parts of the country but not others?

And if "Big Oil" were the serial gouger of public imagination, why have 28 separate federal, state and local investigations over the past 22 years -- without exception -- ended in complete exoneration of the industry?

"Cover-up!" you might say. Then the departed Clinton-Gore administration must have been in on it. After all, the administration's highly charged investigation of gasoline prices last year also came up empty in a report issued last month.

We don't need conspiracy theories to explain gasoline prices. All we need is a dose of Econ 101.

First, more than 30 percent of the gas pumps in the country are in areas that require expensive, environmentally friendly gasoline in the summertime. That gas costs about a dime more to make than the conventional gas used in winter. Second, refiners that make this gas have to pay an additional 6 cents per gallon patent fee to Unocal to employ the cheapest available means to produce it. Third, oil companies have been frantically stockpiling gasoline this spring to ensure that a supply disruption won't blow prices through the roof, as it did last summer in the Chicago/Milwaukee area.

This has taken fuel off the spot market and driven up the price further. But all this represents is future demand competing against current demand.

How much of the price hike can be explained by the above story? Publicly available data suggests that "Big Oil" makes only about 4 cents of profit on every gallon of gasoline sold. Everything else is either production costs or taxes.

Recent reports suggest that, even with the current inventory buildup, an unexpected breakdown at a few key gasoline refining plants or pipelines could send prices this summer above $3 a gallon in some locations.

That's not so much a prediction as it is a warning. Because there are more than a dozen specialized markets for gasoline in this country, a sudden shortage in one often can't be met by shipping excess gasoline from another. It takes time and money to retool refineries to produce different kinds of gasoline, which means temporary shortages in one blend or another take time to address.

In the meantime, given that motorists are rather slow to change their driving behavior in the face of gasoline price hikes, it takes a huge increase in price to reduce demand even a little and to keep the pumps from literally running dry.

Why is there so little refining capacity available? The Naderites allege that the industry is purposefully keeping a lid on capacity to maintain high prices. But until last year, the refining business returned only about a 4 percent profit. It's no mystery why people don't invest in refining under those circumstances. After all, you could simply put money in your checking account and get a better rate of return.

Conservatives, alternatively, allege that the environmentalists have blocked new refining capacity. But again, why search for political bogeymen when economic explanations will suffice?

Let's keep things in perspective. Gas prices seem ridiculously high now, but in today's dollars, gasoline was selling at $2.50 a gallon in 1981. We've seen these prices -- and far higher -- before. They come and they go. High prices induce investors to bring new supplies to market in search of profit. High prices likewise discourage consumption, ensuring that scarce commodities don't become nonexistent commodities.

Today's oil boom will become tomorrow's oil bust and die of natural (economic) causes. We don't need conspiracies to explain energy markets. And we don't need a "national energy plan" to do what the market will do on its own.

--------------------------------------------------------------------------------

-- libs are idiots (moreinterpretation@ugly.com), May 20, 2001

Answers

Canada:

Energy costs push April inflation rate to 10-year high, no relief in sight

-- High energy prices (in@Canada.too), May 20, 2001.

How many of you people drive SUVs? They have bigger gas tanks, get less gas mileage. The SUV drivers are the reason there is a problem with the gas prices. Sure they pay to fill up their tanks. Thats not the issue. The issue is that they have (and are) using a higher percentage of the available supply and driving up the price. Stupid fuckers! We could solve this problem if everyone would trade in their precious SUVs for automobiles that get good gas mileage. The auto industry pushed the SUVs on you dumbasses so that they could get around environmental regulations.

-- Tony Baloney (Fuck the@repugs.com), May 20, 2001.

Dear Tony,

You dumb fucker. Democrats drive SUVs too, including members of Congress.

What a dumbass fucker you are. The best part of you dripped down your old lady's leg.

-- (Dumbass_fucker_detector_@_Unc's.broken_forum), May 20, 2001.

"Sorry, but it doesn't work to blame 'Big Oil'"

It works for me!

-- repugligoons are dumbfucks (oil companies @ making. record profits), May 20, 2001.

Fuck you. This is one instance where I didn't say a word about stupid fucking repugs. Of course there are people from all political leanings that drive SUVs! You think fillers are limited to just the repugs? I'll agree that they have more than their fare share! Your shocking baby assed words didn't faze me a bit. Only shows someone had the balls to use the word Fuck in a sentence. (even though it was very disrespectful). You must be a guilty SUV driver. How stupid can you be?

-- Tony Baloney (Fuck the@repugs.com), May 21, 2001.

Phoney Tony,

Naaa naaa naaa naaa naaa naaa.

Made you look.

Stupid fucker.

-- (Dumbass_fucker_detector@WW.West), May 21, 2001.

And we don't need a "national energy plan" to do what the market will do on its own.

goood juan! Maybe somebody should alert the wanker in the WH bout all this.

-- eyeroller (eyesbe@rolling.org), May 21, 2001.