Gas Prices and Logic

I had an interesting conversation/debate today regarding Gas prices (which are currently quite painful). I am baffled by our society's inability to apply logic to this situation. I understand peoples anger regarding the price at the pump, but I don't understand the blind rage that leads good-natured folks to vilify oil companies.

These oil companies have invested countless billions in exploration and production, and deserve a return on this investment. Not only do they deserve an return, but they owe it to their share-holders. The money invested is not from their own piggy-bank, but is that of investors the world over, including most anyone that has a mutual fund, or is involved with a pension plan.

The discussion I found myself in seemed to center around the notion of "price gouging". This is truly a great topic, but one I feel must be defined. It is simply too easy to lob the "gouging grenade" into the argument without any true support of it.

I held the position that we must first define what gouging is. Is it an absolute dollar amount? Or is it a particular profit margin that becomes too outrageous?

Really, for consistency's sake it has to be a profit margin, or some similar measure of "profit" vs. "expense" expressed in a ratio.

What was interesting to me was that I couldn't get an answer pinned down. The conversation kept being pulled in the direction of blind anger toward these "robber barons". The truth of the matter is that when you compare the profit margins of the oil companies to other businesses their margins are actually lower than many other Fortune 500 companies.

Sadly, it really doesn't matter. Everyone seems to complain, but no-one is adjusting their behavior very much. The only way to truly affect prices would be to reduce demand, and the only way that is happening is for us to make a dramatic reduction in the amount of gasoline we use as a society. We vote with our vehicles on this every day, and the vote is continuously in favor of high prices.