Refineries’ Profit Surge Comes On Top of Record Profits Reaped From High Oil Prices; Group Asks, “Where’s the White House? Where’s Congress?”
Santa Monica, CA — At the accelerating rate of increase in pump prices, gasoline will soon cost over $4.00 a gallon in California and other high-priced states, said Consumer Watchdog, urging Congress and the White House to push investigations of oil trading speculation and refineries’ deliberate cutbacks in gasoline production.
The House and Senate each held one committee hearing last week related to energy prices, but much more is needed, said Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights). The federal Energy Information Administration’s weekly report of national average prices for regular hitting $3.332 today, and diesel averaging $3.955, should qualify as a “national economic emergency,” said the watchdog group.
“Unlike ordinary consumers, Congress and the White House have amplified voices that oil companies and energy speculators can hear,” said Judy Dugan, research director of Consumer Watchdog and its Oilwatchdog.org project. “Concerted warnings that these price spikes will bring consequences could dampen the continuing leap in pump prices.”
New industry regulation would indeed take months at best to have a clear effect, but a shot over the bow could be faster-acting, said Consumer Watchdog, especially if the White House were to join hands with Congress—unlikely as that might be.
“The major oil companies are almost certain to report another record round of first-quarter profits in the next few weeks, yet their refineries are reducing production well beyond what’s necessary for the yearly switch to clean-air gasoline formulas,” said Dugan. “Refineries are trying to throttle back faster than empty-pocketed drivers can cut back their gasoline usage, in order to keep pump prices rising. Pump prices have become a national economic emergency.”
The new round of record prices comes as gasoline consumption is declining nationally from last year, according federal energy data. In California, gasoline consumption has been down for the last seven quarters, according to the state tax board.
Consumer Watchdog has called for:
– Closing the Enron Loophole in commodity trading regulation. A regulatory measure in the federal farm bill (S.2058 by Sens. Dianne Feinstein and Carl Levin) would help stop speculative oil pricing. This measure is stuck in a fight over other subsidies in the House-Senate conference committee. (See more on Enron Loophole and farm bill amendment here.) Regulators should also increase the amount of margin funds that traders must put up in energy markets to help suppress speculation.
– Senate approval of an alternative fuels bill funded by withdrawing $1.8 billion a year in unjustified taxpayer subsidies to oil companies. This measure, passed by the House, has not been taken up in the Senate, where opponents are using a filibuster tactic to require 60 votes for passage. A similar House measure was removed from the federal energy bill by the Senate last year under pressure from the oil lobby. (Find text of HR 5351 here.)
– Oversight of refinery operations, including regulation of national gasoline supplies. In the last decade, the average on-hand supply of gasoline has dropped from 30 days’ worth to about 22 days. This makes prices increasingly sensitive to any cuts in production.
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