April 30, 2007
CONTACT: Judy Dugan, 310-392-0522, ext. 305, or cell: 213-280-0175
Oil Companies Created "Shortage" That Is Driving Record Pump Prices, Says Group;
Last Year’s Record Is Shattered at $3.40 for Regular in CA; New U.S. Mark Is Cents Away
Santa Monica, CA — Even as crude oil prices fell slightly today, gasoline prices continued a rocket trajectory upward due to "supply shortages" resulting from a combination of ineptness and greed on the part of oil companies, said the Foundation for Taxpayer and Consumer Rights.
Analysts blamed new refinery outages in Texas and Oklahoma, while a spokesman for the American Petroleum Institute told the Kansas City Star that the problem was partly due to falling imports of gasoline. (See the story here.) Tips from gasoline dealers in Southern California showed price increases of nearly a dime at wholesale last week, before the new refinery problems. (See the report here.)
"Oil companies that have refused to increase refinery capacity enough to meet population took refineries out of service for longer than usual maintenance as well as fires, leaks and shortages of repair supplies, but refused to import gasoline to make up the difference," said Judy Dugan, research director of FTCR and OilWatchdog.org. "Then they have the gall to behave as though gasoline prices are an act of fate, not the shortage that they created."
The shortage of supply allowed oil companies including Exxon and Chevron to continue a record streak of profits, posting new first-quarter highs largely on the basis of refinery profits that shot to unheard-of levels in the U.S., especially in the West. (See more information on Exxon and Chevron profits.)
Prices in California hit $3.397 for regular in California today, according to AAA, breaking last year’s May record of $3.38. The AAA national daily average of $2.953 is only eight cents shy of last year’s high, $3.03, which wasn’t reached until August. A federal weekly price report due out later today will show the same trajectory, but because it is a weekly average it will not fully reflect price spikes over the past week.
"Crude oil is backing up at U.S. refineries, waiting to be made into gasoline," said Dugan. "It is stark evidence that government and regulators must step in to oversee and regulate both refinery capacity and supplies of gasoline. Otherwise this cycle of ever-higher pump prices and ever-higher oil company profits will continue while both individual motorists and the national economy keep paying the price."
FTCR also favors government action to speed development of bio-fuels and other reductions in use of petroleum fuels, including vehicle efficiency and broader conservation.
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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.