Marketplace Radio Program (NPR/American Public Media)
The following commentary by Jamie Court was broadcast on Tuesday, October 11, 2005 on the Marketplace Radio Program on National Public Radio. Click here to listen the audio of the commentary.
Kai Ryssdal (Anchor): You’d think, times and pump prices being what they are, that all the oil and gas that’s produced in this country would stay in this country. The more we keep, you’d think, the lower prices would be; supply and demand and all that.
Consumer advocate and commentator Jamie Court says don’t look now, but part of
our supply is on its way overseas.
Jamie Court (FTCR): Refineries make the residential heating oil that warms your home. Part of the reason home heating prices are skyrocketing is there are barely enough refineries to meet demand. Oil companies like it that way. A scarce commodity keeps their prices and profits high.
So the push is on in Washington to increase American refinery capacity. There’s one catch though. If we want to see prices fall, then oil companies have to sell their heating oil and petroleum products here in America, not in Singapore or Chile.
You see, right now in a period of peak demand and limited supply, oil companies are exporting our heating oil all across the globe. That’s creating a shortage right here at home and driving up the price.
Department of Energy data show that oil companies exported 1 and a half BILLION more gallons of liquid heating products in the first seven months of 2005 than during the same period last year.
That amount is about 20 Times greater than the size of the entire North East Strategic Reserve for heating oil. At the same time, the energy department numbers show that imports are falling.
With a severe winter warning, that’s a recipe for big profits for oil companies and impossible choices for consumers. The poorest will have to pick between food and keeping their families warm. It’s a choice no family should have to make in America.
Legislation that passed the House of Representatives last week gave new subsidies to oil companies to build refineries. But the bill put no restrictions on where the petroleum products could be sent. In other words it’s all carrots and no sticks for some of the fattest rabbits on Wall Street.
Oil companies can make plenty of money selling oil right here in America. So, why would oil companies export product away from the most expensive market in the world? To create a shortage that makes their products even more expensive.
Accuweather got it right today. It’s gonna be a cold, cold winter. But if Washington doesn’t wise up and stop Americans’ heating fuel from being sent abroad, it’s going to be freezing.