Thread by @AntoniaJuhasz

Alright folks, here's a little lecture from my book, The Tyranny of Oil, about how #gasoline prices are set in the U.S., and yes, it's largely under the control of the largest oil companies -- Exxon, Chevron, BP, Shell, etc, -- even though it's not legally supposed to be. a 🧵

1. The major oil companies in the U.S. are vertically integrated, controlling production, refining, & sales.

2) They set the price of #gasoline at stations they own. But most stations are "independently owned" & branded- ie selling the major brands "Exxon" "Shell" "Chevron" etc.

3) It is illegal for oil companies to set prices at
gas stations they do not own, but they've has found several ways to get around the law—by controlling the prices charged at its branded stations through the wholesale price for gas, "suggested" retail prices, & zone pricing./3

4) The wholesale price is the price at which the gas station purchases its gasoline from the oil company. Big Oil sets the wholesale price of all gasoline sold to its branded dealers./4

5) Setting the wholesale price allows Big Oil to establish a vise around the price branded gas stations can charge and a lock on the profits from higher retail prices.

6) The price we pay at the pump is the wholesale price (going to the oil company) + a tiny margin, usually just 3 -10 cents per gallon. These pennies per gallon are the ONLY profit the gas station owner receives. Their money is mostly off of the convenience store, not the gas.

7) Beyond merely setting the wholesale price, it is common for oil companies to “suggest” a retail gas price to all dealers selling its gasoline. In an attempt to avoid charges of price-fixing, these "suggestions" are usually given verbally by oil company representatives.

8) By the way, the 3 to 10 cents per gallon that goes to the gas station owner generally remains constant regardless of the retail price. Thus, all of the profit for higher gas prices goes to the oil company and pretty much never to the gas station owner.

9) Antitrust law makes it illegal for companies to sell wholesale products at different prices to “similarly situated retailers.” To get around the law, the oil companies have developed extremely complex zone-pricing systems to differentiate between retailers in the same area.

10) & they take advantage of high oil prices via the "rockets and feathers" phenomena: as the price of oil rises, the price of gas immediately shoots up (often out of proportion). But when the price of oil falls (as in the last week), the gas prices take a lot longer to catch up.

11) We have many laws to address all of these phenomena at the Federal and state levels, including laws against price-gouging, "unethical pricing," and anti-trust laws against collusion among oil companies in setting the price of gasoline.

12) Thus, U.S. oil companies could be asked to limit gasoline price spikes to demonstrate a desire not to profit off of #RussiaWarOnUkraine. Alternatively, they could be told not to pass the price spike onto consumers by federal and state governments.

13) But Americans pay shockingly little for #gasoline compared to other nations--a reason why we're the largest global consumer of gasoline, with devastating impacts to human health, the environment & climate; also leaving us at the mercy of fossil fuels & those who control them.

14) And consumption isn't equal: wealthier Americans & industry consume the lions-share of #gasoline (& are able to afford higher prices). So, lower prices aren't the end goal. These are: to stop manipulative pricing & war profiteering by Big Oil, and transition off fossil fuels.