Filled the tank of your car lately? Go into apoplexy at the sticker shock?? The big oil companies are making an average of $13.4 million an hour. The average price of unleaded, nationwide, is $3.10 — it’s more, here in the Patch. In Gorda, California, a gallon of premium in $4.99. Seem a little excessive to you?
The topic of gasoline price gouging is on the Congressional plate — a bill Mr. Bush says he’ll veto [and note that the first I heard of it was in financial news -- always follow the $$$.] If you ever thought Dubby was “your friend” — guess again.
In the bite-the-bullet tradition, I’m not entirely uncomfortable with the notion that the higher the gas prices, the more seriously we will all take the issues of alternative fuels and global warming; we must find a way to break our oil addiction. But, as I live about forty miles from a decent grocery store, I arrive with less in my pocket to spend on goods that cost more with each gas hike, to offset shipping costs. And I’m sure I’m not alone.
Big Oil is making 13 mil an hour — a good portion of America will be forced to eat and travel less to make sure they have a profitable summer — and Bush will veto any attempts to regulate.
Get the picture? Thought you would.
Jude
Raw data about the rise in gas prices
Todd, The Blue State
2007.05.22
As gasoline reached yet another all-time high today, even when factoring in inflation, here are some of the statistics to keep in mind:
This is the 10th day in a row that gas prices have reached an all-time high.
Prices have gone up 50% since January.
The highest gas prices in the country are in Chicago, where a gallon of regular costs $3.59. But that was according to the Lundberg Survey taken Sunday — so things could have changed since then.
The GAO reports that gasoline price increases have drained $20 billion out of the pockets of American taxpayers so far this year.
Unless prices fall suddenly, Wednesday will mark the longest stretch of $3.00 gasoline since AAA began keeping track. Again, these stats are inflation-adjusted.
High gas prices are having an impact on the retail industry. According to the National Retail Federation’s 2007 Gas Prices Consumer Intentions and Actions Survey, 74% of consumers say the spike in gas prices has impacted their spending habits. Also, 40% say they are taking fewer shopping trips.
AAA, which also monitors travel trends, says they are expecting a decrease in travel on Memorial Day weekend.
21 governors are asking Congress to investigate allegations of gouging on the part of the oil industry.
Gas rip-off: Tens of thousands tell Congress to get tough with price-gouging!
Joshua Holland, Alternet
May 24 2007
Congress begins hearings today on H.R. 1252, a bill that would make gas price-gouging a federal crime, punishable by 10 years in the slammer. Nancy Pelosi said she’ll move the bill to a vote this week if she gets the two-thirds majority she needs to fast track it through.
Price-gouging — and its flip-side, manipulating prices downwards for electoral gains — is the epitome of low-hanging fruit. High gas prices hurt, and they hurt ultra-nationalists and white evangelicals and security moms as much as anyone else.
Public Citizen estimates that Big Oil has taken in a quarter of a trillion in profits under the Bushies. Two-thirds of adults in a recent poll said gas prices had caused them “financial hardship.”
Earlier this month, gas prices reached an all-time record high, beating out inflation-adjusted prices from 1981. When it comes to the energy sector, you have to be deeply brainwashed to believe the “hidden hand” of the market is at play.
The lowest prices at the gasoline pump for the entirety of 2006 hit during the week of the mid-term elections. They had dropped steadily for three months before Election Day — average gas prices dropped by fifty cents, or 17 percent, between the end of August and the end of September — they started rising again the week after votes were cast and they’ve been rising ever since.
[Open link for a graph by Gandhi at Howard Death Watch, adapted from OPEC data.]
What happened? A lot.
There was this bit of gamesmanship during the summer:
… the Saudis and other pro-US players in the Middle East play[ed] a delicate balancing game by promising their OPEC friends that they would cut production, but then failing to commit to the cuts and even raising production slightly instead.
Then, in early August, just weeks after former Goldman Sachs CEO Henry Paulson joined the Bush administration as Secretary of Treasury, the brokerage giant dumped $6 billion in gas futures on the market, a move that “caught traders by surprise.”
The economist Lew Rockwell explained that what Goldman Sachs did is known as “painting the tape:”
Goldman doesn’t lose money. This is a managed commodity index. Goldman manages the index, but the actual money put up comes from institutions, hedge funds and other unlucky saps that trusted Goldman to manage the commodity index as a hedge against inflation – not to bail out of $6 billion in contracts over a few weeks. The result: Unlucky saps – Major losses. Goldman – Zero losses and their man running the Treasury. Which side of this trade would you want to be on?
Big Oil has been busted for price-fixing in the past. The Foundation for Taxpayer and Consumer Rights exposed internal oil company memos that show how the industry intentionally reduced domestic refining capacity to drive up profits. The three internal memos from Mobil, Chevron, and Texaco show different ways the oil giants closed down refining capacity and drove independent refiners out of business.
Senator Ron Wyden investigated the issue, and issued a damning report (PDF) …
The oil industry and its allies would have the public believe that insufficient refining capacity, restrictive environmental standards, growing gasoline demand and OPEC production cutbacks are the primary reasons for the current oil and gas supply problem.
However, the record shows – supported by documents I have obtained – that … major oil companies pursued efforts to curtail refinery capacity as a strategy for improving profit margins; that competing oil companies worked together to subvert supply; that refinery closures inhibited supply; and that oil companies are reaping record profits….
Congress has an opportunity to treat oil execs who get caught doing this stuff like the criminals they are (that is, if we can prosecute them, but that’s a whole other story). It’ll be a tough fight; the oil and gas energy gave $19 million dollars to Congress last year, 82% to Republicans, who can be expected to block the bill.
It’s time to bring some pressure to bear. MoveOn is asking people to sign a petition — they say the response has been overwhelming with over 150,000 signatures so far — and today would be a very good day to contact your representative.
Gas price hikes’ cost: $146 a car so far this year
GAO tells Congress that the record levels have burned up $20 billion
MSNBC
May 23, 2007
WASHINGTON - The jump in U.S. gasoline prices this year has so far drained consumers of an extra $20 billion, or about $146 for each passenger car in the country, the Government Accountability Office told Congress on Tuesday.
The national price for regular unleaded gasoline hit a record $3.22 a gallon this week, and is up $1.05 since the beginning of February, according to the Energy Department.
The added expense is taking money away from consumers to spend on other goods and services.
“Spending billions more on gasoline constrains consumers’ budgets, leaving less money available for other purchases,” GAO’s Thomas McCool said in written testimony to a House Oversight and Investigations Subcommittee hearing on the cause of record prices.
Like many other energy experts, McCool said the GAO has found that current high pump costs are the result of a large amount of oil refining capacity being offline, strong gasoline demand and lower fuel inventories.
Many lawmakers blame the lack of competition in the oil industry from mega oil company mergers for the run-up in gasoline prices.
McCool said company mergers in the 1990s caused wholesale gasoline prices to rise during that period, but the agency has not performed modeling on mergers that occurred since 2000 and therefore could not say what the effect has been on current fuel prices.
However, he said, “These mergers would further increase market concentration nationwide since there are now fewer oil companies.”
Officials from oil giants Exxon Mobil, Chevron and Shell Oil, along with major oil refiner Valero Energy Corp., were asked to testify at the hearing but declined to appear.
Federal Trade Commission member William Kovacic said his agency was closely monitoring the U.S. gasoline market for any unusual moves in prices.
“Because gasoline consumers typically do not reduce their purchases substantially in response to price increases, they are vulnerable to substantial price increases,” he said.
Speaking to reporters before the hearing, he declined to comment on whether the FTC has found any evidence in the current price rise of oil companies overcharging consumers.
Kovacic said in his written testimony that the “lion’s share” of the increase in pump prices appears to be attributable to refinery outages, higher gasoline use and lower fuel imports.
He said the FTC’s experience from past investigations and from its current monitoring program shows that unusual movements in gasoline prices “typically have a business-related cause,” such as changes in crude oil costs, refinery problems or pipeline disruptions.
Oil companies have pointed out that more than 30 prior government investigations into alleged gasoline profiteering have proven the industry did nothing illegal.
Rep. Bart Stupak, the chairman of the subcommittee, said the FTC needs more authority to punish oil companies that gouge drivers at the pump.
A bill he has introduced that would give the agency that authority, which has support from more than 120 lawmakers, is scheduled to be voted Wednesday by the House of Representatives.
Bush Threatens Veto of Gas Gouging Bill
William L. Watts, Dow Jones
May 23, 2007
WASHINGTON (Dow Jones) — President Bush is likely to veto legislation that would create hefty fines and criminal penalties for gasoline price-gouging, the White House said Wednesday.
The threat came as the House prepared to vote on a Democratic plan aimed at battling rising gasoline prices by requiring the Federal Trade Commission to define “price gouging.” The bill would create fines and criminal penalties, including jail time, for industry executives found guilty of gouging.
The White House, in a formal statement of administration policy, said the legislation amounted to price controls that would hinder oil companies and retailers from responding to market signals, potentially worsening fuel shortages.
“Gasoline price controls are an old — and failed — policy choice that will exacerbate shortages and increase fuel hoarding after natural disasters, denying fuel to people when they most need it,” the White House said, adding that Bush’s senior advisers would recommend a veto of the House bill or any similar legislation that makes it to his desk.
The vote comes as lawmakers weigh a number of measures in the face of soaring gasoline prices. The House ignored a veto threat Tuesday to overwhelmingly pass legislation that would allow the Justice Department to sue members of the 11-nation Organization of Petroleum Exporting Countries, or OPEC, under U.S. antitrust laws.
Democrats defended the anti-gouging package, saying it provides safeguards aimed at protecting small businesses and taking account of supply disruptions created by natural disasters and other problems.
Republicans are “asking this congress to wait until a more perfect time … to help the American consumer out,” said Rep. Bobby Rush, D-Ill. “The American people are suffering right now and they are demanding this Congress take action right now. There can never be a more perfect time for this Congress to take action.”
The bill’s sponsor, Rep. Bart Stupak, D-Mich., added a provision to the bill that allows the FTC to pursue price-gouging only after the president has declared an energy emergency. A bill pending in the Senate has the same provision.
Republicans said the addition of the provision was an effort to shore up support for the bill among oil-patch Democrats. The bill is being considered under special rules that require a two-thirds supermajority.
Fed Up with Gas Prices? Blame the Bush Administration for Not Enforcing Anti-Trust Laws
Rep. John Conyers, BlackAmericaWeb
Wednesday, May 23, 2007
In recent weeks, prices at the pump have hit an all-time high. The average price for a gallon of gas in the United States is currently $3.036, just two cents short of the record high reached in September 2005 after Hurricanes Katrina and Rita hit the Gulf Coast.
Paradoxically, this year, rising gas prices are not being driven by increases in the cost of oil. In fact, a barrel of oil is actually $7 cheaper than it was this time last year. How is it possible for gas prices to reach record highs while the price of oil remains relatively stable?
We examined this and related questions during a House Judiciary Committee Antitrust Task Force hearing titled, “Prices at the Pump: Market Failure and the Oil Industry.” We found that America’s pain at the pump has three possible causes:
Cartels. OPEC accounts for two-thirds of the world’s oil reserves and over 40 percent of the world’s oil production. Most significantly, OPEC’s oil exports represent about 70 percent of the oil traded internationally. This affords them considerable control over the global market. Its net oil export revenues should reach nearly $395 billion this year, and its influence on the oil market is dominant, especially when it decides to reduce or increase its levels of production. For years, the OPEC Cartel has purposefully driven up the cost of imported crude oil to satisfy the greed of its members. We have long decried OPEC, but, sadly, no one in government has yet tried to take any action.
Lack of Production. Another potential cause of high gasoline prices is the fact that the Big Oil companies have not increased production in the past five years. And let’s be clear — it is not because they cannot afford to make these investments. Oil companies today are enjoying record profits, and while they could use those profits to invest in more production capacity, instead they use the money to buy back shares in the market.
As Mark Cooper testified during the hearing, “Supply has become a strategic variable in U.S. oil markets, subject to the control of a handful of companies. The domestic oil oligopoly has systematically under-invested in refining capacity.” So we are left with a shortage of refineries and not enough capacity to store reserves. There are so few refineries that the existing ones are using 95 percent of their total capacity, and they are making a lot of money. Last year, refiners’ profits jumped 39 percent, to $24 billion. In California, gasoline prices have risen 48 percent since the end of last year. Without access to new reserves, consumers will continue to feel the squeeze at the pump.
Consolidation. The final potential cause is the consolidation of the industry. In 1993, the five biggest refiners in the U.S. controlled 35 percent of the market. By 2004, they controlled 56 percent. In some regions of the country, a few refineries have an oligopoly on the market. In fact, a Senate report in 2002 reported “tight oligopolies” operating in 28 states. With this type of market structure, each individual refinery can limit capacity and drive up prices.
In this type of marketplace, with these stakes, we need an administration that is going to have an active, vigorous merger enforcement policy. As reiterated by the Honorable Richard Blumenthal at the panel, the “Federal government’s lax and lackluster enforcement of anti-trust laws has led to … more and more market power concentrated in fewer and fewer hands.”
In response to these findings, last week I introduced a bill that would address America’s skyrocketing gas prices — The No Oil Producing and Exporting Cartels Act of 2007, or NOPEC. I was joined by bipartisan cosponsors, Reps. Zoe Lofgren and Steve Chabot. NOPEC will make participation by foreign governments in oil cartels engaging in conduct designed to fix the price of oil illegal under U.S. law. Under the bill, OPEC nations will no longer be able to hide behind the dubious doctrines of sovereign immunity and act of state, policies that originated to accord proper respect among nations for each other’s core governmental decision-making. These doctrines have no place in shielding state profit-making enterprises from accountability for anti-competitive marketplace conduct that, when engaged in by private enterprises, subjects the wrongdoers to heavy fines and time in prison. The bill makes clear that foreign governments are persons under our antitrust laws, and subject to suit, and specifically authorizes the Department of Justice to bring lawsuits in federal court against oil cartel members.
We don’t have to continue to stand by and watch OPEC dictate the price of our gasoline without any penalty or recourse. By passing this bill, we can put our antitrust laws to work against OPEC, just as we would against any other cartel that is fleecing American consumers of their hard-earned money.
Rep. John Conyers Jr. (D-Michigan) is serving his 20th term in Congress.
Strip Down Price Gouging Bill
House Democrats Buckle to Big Oil
CORPORATE CRIME REPORTER, CounterPunch
May 24, 2007
Behold the spineless Democratic Party.
On Iraq, no deadlines.
On trade, no enforceable worker protections.
Now, on oil industry price gouging, collapse.
In the face of withering pressure from the oil industry, the Democrats in the House, led by Congressman Bart Stupak (D-Michigan), have reportedly castrated their own legislation.
Stupak’s original bill–HR 1252–would make it unlawful to sell crude oil, gasoline, natural gas, or petroleum distillates at a price that “is unconscionably excessive” or “indicates the seller is taking unfair advantage unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.”
The law would be enforced by the Federal Trade Commission (FTC).
But according to a report by Darren Goode in Congress Daily AM, late last night, Stupak “added a trigger to his bill allowing the FTC to go after price gougers only during presidentially-declared energy emergencies.”
In other words–almost never.
Tyson Slocum of Public Citizen’s Congress Watch called the move “pretty unfortunate.”
Slocum said that Stupak’s original bill would have given the FTC long needed powers to go after oil companies in situations like the one the country is facing today–skyrocketing gasoline prices.
“There is no question that the record high gasoline prices we are seeing today amount to just a transfer of wealth,” Slocum said. “Up until this point, the FTC has not moved, because the antitrust laws on the books are so weak. There is no price gouging law currently on the books.”
Stupak and more than 100 House members said they wanted to put that law on the books. But now, it looks like the Democrats have once again caved to the dominant corporate powers that be.
The House will vote on the bill later today.
Slocum said that Public Citizen was strongly in favor of the original Stupak bill.
But if the bill is going to be similar to a bill introduced by Senator Maria Cantwell (D-Washington)–only enforceable in times of energy emergencies–Public Citizen would not fight for it.
“This shows the oil industry still holds sway over the Democratic Party,” Slocum said.
“Things are definitely different, but not that much different. Are you going to see the Democrats taking big swings at Big Oil? No.”
Stupak’s office did not return calls seeking comment.
Slocum said that some environmental groups want to see higher gasoline prices so that Americans drive less–like in Europe.
“But in Europe, the gasoline prices are higher because of taxes,” Slocum said. “And the taxes are used to fund mass transit. Here, the money goes straight to the oil companies. It’s just a transfer of wealth.”
Corporate Crime Reporter is located in Washington, DC. They can be reached through their website.
“So keep fightin’ for freedom and justice, beloveds, but don’t you forget to have fun doin’ it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin’ ass and celebratin’ the sheer joy of a good fight, be sure to tell those who come after how much fun it was.”
~ Molly Ivins, 1944 - 2007
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May 24th, 2007