LABJ FORUM – Blame Game

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LABJ FORUM – Blame Game

Gasoline prices are back up to historic highs, reaching an average of $2.250 in the Los Angeles area last week. U.S. demand for gasoline is at more than 9 million barrels a day, a record for any week in May, and with the summer travel season about to begin, the numbers promise to go even higher. So the Business Journal asks:

Who’s to blame for the exorbitant gas prices?

Tom Kelly

Executive Vice President

DaVita Inc.

I’d say the recovering world economy and the rapidly growing Chinese economy. Raw material prices really respond the most to world demand. The robust Chinese growth is really a new factor in the world economy in terms of demand. I’d say we’ve contributed to world instability, and instability leads to price volatility. The uncertain picture in the world, we’re the initiator and the recipient.

Dustin Snell

Chief Executive

Unisyn Software LLC

While there may be a few corporations taking advantage of the situation in Iraq, it’s largely a supply-and-demand question. The price of an item is set by what the market will bear. As long as the market will bear the price of $2.35 a gallon, or whatever it may be, that is what it’s worth. It’s not going to go down until we buy less of it. We’re the largest consumer and we affect the prices the most. In Europe, they have paid higher prices all along. They’re used to it. We deal with this in our business every day. To maximize our revenue, we raise the prices as high as we can without causing a reduction in sales to the point where total revenues decrease. We can choose to drive less, we can buy hybrid cars, we can take public transit. If gas prices were $10 a gallon, believe me, that would happen.

David Baxter

Producer

Shuffle

I would say George W. Bush. Him and all his Halliburton buddies controlling the price of oil for their profit. There’s no concern for alternative fuel sources, it’s just mainly about lining the pockets of big oil. I pay about an extra $20 or so to fill up my tank. I drive an SUV.

Gary Bostwick

Partner

Sheppard, Mullin, Richter & Hampton LLP

I would look first to those making the energy policy and ask why it is that we are so dependent on external circumstances and decisions of foreign powers for our fuel prices. I would be pointing the finger at our own government in not controlling our dependence on OPEC. Obviously if OPEC raises prices, they are causing the problem, but why are they able to cause that problem? We need to try to have some control over it. The day before yesterday, after filling up my car, I was shocked. I have an older Mercedes, a gas guzzler. In terms of dollars, my consumption has gone up by about 15 percent in the last month or so.

Richard Myerson

President

Media Distributors

OPEC always has something to do with it, but even they are just responding to the market they’re in. OPEC can manipulate prices, but I don’t think they’ve gotten to the ceiling of how high they can raise prices yet. It’s probably a result of not enough forward planning with regard to alternative fuel sources here. With China’s huge demand for fuel, the price of oil has skyrocketed. It’s a combination of that demand, continued demand in the U.S. and some continuing issues in the Middle East. In the Middle East, OPEC responds to the regional instability, trying to safeguard a continuous flow of oil. But that might well be a cop-out. When it all comes down to it, there’s just an incredibly high demand for oil resources.

Dan Rebert

Effects Producer

Masters FX Inc.

I hear bits and pieces in talking to people and see it in the news, and there are so many spins and angles to it, I don’t know what to believe. My grandmother always told me, don’t believe anything you read and only half of what you see. Great advice for a special effects artist. I probably have a $10 or $15 difference in my cost per tank. I commute like 50 miles one way to work every day.

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