Washington, D.C. — Petroleum consultant Tim Hamilton, an expert for FTCR, testified before the US Senate Judiciary Committee today that American oil companies have reconstituted the old Standard Oil Trust, the Rockefeller monopoly that sparked the enactment of anti-trust laws, as a means to short the market and gouge motorists.
Hamilton explained that anti-trust laws needed to be overhauled to meet modern anti-trust threats. His comments were greeted warmly by senators angry that oil company executives had refused to testify before the Senate today in the wake of recent world record profit reports.
Read Hamilton’s full testimony at: http://www.consumerwatchdog.org/energy/fs/5805.pdf
Hamilton testified: “Today, the industry acts in unison to limit supply as a means to drive up price. A key component is the large shared storage tank located near a refinery, pipeline, or seaport terminal where the companies commingle their gasoline or diesel. The companies use a complicated formula of contracts or exchange agreements to divide up the supplies produced locally or imported into the area. Computers at each company track the fuel supply of not only their inventory, but also the inventory of competitors throughout the entire region. Shipping and pipeline schedules are tracked to show when and where fuel will be exported or imported, the volumes involved, the impact on local inventories and the identification of the industry participant.
“One company on its own or in concert with others can export, delay or divert scheduled imports, or cut back production at a local refinery. This independent actions draws down their portion of the supply in the shared tank. All the competitors are aware of the shortfalls (often even before event occurs). The initiating company then starts raising prices directly or indirectly to its gasoline stations. Utilizing third party reporting services and Internet technology, the other companies immediately recognize a price spike is underway and counter with increases of wholesale prices to their stations operators. Sometimes gasoline marketers will receive up to four changes in price in a single 24-hour period.
“As the companies monitor each price increase from competitors on their computer screens, consumers see pump prices skyrocket across the region and complain bitterly of price fixing. Elected officials turn to the Federal Trade Commission (FTC) asking for investigations. The FTC typically issues a study report stating no illegal behavior was found and the oil companies kick out press releases proclaiming how ‘we didn’t do anything wrong!’ ”
For more information on research by FTCR and Hamilton on the high price of gasoline visit: http://www.consumerwatchdog.org/energy/gasprices/
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