Lower Gasoline Supply Will Lead to Upward Price Turn, Says Group
Motorists hoping they’d seen the last of $3-plus gasoline are in for a disappointment, the Foundation for Taxpayer and Consumer Rights said today. Oil companies that in the past several weeks increased gasoline supplies, mostly through imports, are now curbing the rise even though national supplies remain far below the norm for summer, according to federal reports released today. The fall in gasoline supply will quickly boost prices if continued, said FTCR. (See supply report here.)
“It’s a classic bait and switch by the oil companies, using imports to dampen prices as consumers’ (and lawmakers’) rage peaks, then when Congress wimps out on the energy bill and the media loses interest, they pull the rug,” said Judy Dugan, research director of OilWatchdog.org and FTCR, its parent organization. “Oil companies, having killed almost everything they disliked in the Senate’s energy bill, can drop their charade of good corporate citizenship.”
Today’s weekly supply report by the federal Energy Information Administration showed that even though refineries utilization increased by 2%, a significant figure, national gasoline supplies dropped by .3% over last week and were 5.5% below last year, a significant shortage. The reasons included a 1.3% weekly reduction in what are called “components,” meaning mostly imported, partially finished gasoline that is blended to specification when it arrives in the U.S. Components were 4.5% below last year. (See EIA analysis here.)
“The federal reports indicate no shortage of importable components, and no shortage of crude oil waiting to be refined,” said Dugan. It’s just another ‘business decision’ aimed at keeping prices up and profits up, with no regard for the public or for the U.S. economy.”
Although Monday’s federal price report showed gasoline pump prices continuing to drop, today’s AAA price reports show early indications of a stall. The national average is flat from the previous day for the first time in weeks, at $2.975, and the California average is slightly lower at $3.181.
California supplies in recent weeks rose more sharply than national supplies, so its price reductions will likely come to a slower halt, said FTCR. But because California is nearly 12% of the national market, a small price reduction in California while the national average is flat means prices have actually started rising in other states. (See California vs. US consumption here.)
“As the House of Representatives takes up the federal energy bill, it must put a hard eye on the industry’s supply manipulation, and close the multibillion-dollar tax loopholes that Big Oil so successfully restored in the Senate version of the bill,” said Dugan.
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The Foundation for Taxpayer and Consumer Rights is a leading nonprofit and nonpartisan consumer watchdog group. For more information visit us on the web at: www.ConsumerWatchdog.org and www.OilWatchdog.org.