Identical forces move prices of oil and oranges

Bob Tippee

The price of oranges is about to triple in the US, and nobody's complaining.

After all, complaining can't change anything. Freezing weather in California and other citrus-growing areas has damaged winter crops. Shortage looms.

According to a marketer of Californian citrus products quoted in the Houston Chronicle, an orange that recently cost 50¢ soon may cost $1.49.

There will be no howls about "price-gouging," however. Congress will summon no citrus growers to accusatory hearings. Newspapers will not write stories about some past conversion of orange-producing land to other use and call it price manipulation.

Americans reserve their vicious suspicion for oil.

They threw a fit when gasoline prices jumped after the twin Gulf Coast hurricanes of summer 2005 idled 30% of US refining capacity.

Seldom is petroleum shortage as visible as it was when refineries were under water, producing platforms were listing, drilling units were adrift, and marine pipelines were dislocated.

Seldom is the reason for prices of crude oil, gas, and petroleum products to rise as evident as it was then. Yet Americans thought they were being gypped.

The oil price spurt of late 2005 and early 2006 was as much a product of cataclysmic weather as the leap of orange prices will be. Yet Americans will continue to believe that some cabal of oil company executives "gouged" them on gasoline prices. And they'll have nothing but well-justified sympathy for citrus growers.

The profits oil companies reported after the gasoline-price jump supposedly explain American pique. Why? Margins rise for any commodity in short supply, lifting profits of producers able to sustain output.

Margins will rise for crops not destroyed by the recent US freeze, as will profits for growers in warmer areas. That's no scandal. It's an incentive to keep oranges moving to market. Similarly, oil margins elevated after the hurricanes attracted foreign products to the US and kept a treacherous supply disruption from becoming disaster.

The orange-oil analogy can be carried too far. But prices of the commodities rise and fall for identical reasons: supply and demand. It's way past time for Americans to understand that.

This feature will appear online next on Feb. 2.

(Online Jan. 19, 2007; author's e-mail:

Related Articles

Sanchez Energy to sell Eagle Ford midstream assets to affiliate

09/28/2015 Sanchez Energy Corp. has agreed to sell certain pipeline, gathering, and compression assets on the western part of its Catarina asset in the Eagle ...

House Ways and Means GOP members express concern over IRS MLP proposal

09/28/2015 A May 6 US Internal Revenue service proposed rulemaking on qualifying income from oil and gas and other publicly traded master limited partnerships...

SPE ATCE: Panel draws industry roadmap to 2040

09/28/2015 Panelists at the opening general session of the Society of Petroleum Engineers’ Annual Technology Conference & Expo (ATCE) were asked to discus...

Energy Transfer Equity, Williams to merge in $37.7-billion deal

09/28/2015 Energy Transfer Equity LP (ETE), Dallas, and Williams Cos. Inc., Tulsa, have agreed to merge in a deal valued at $37.7 billion, including the assum...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected