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Misdeeds – Oil Watchdog http://oilwatchdog.org Insider news and analysis from America's top Consumer Advocates. Fri, 08 Oct 2010 00:37:07 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 "Hot Fuel" Fix Urgent http://oilwatchdog.org/hot-fuel-fix-urgent/ http://oilwatchdog.org/hot-fuel-fix-urgent/#comments Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/hot-fuel-fix-urgent/ NEWS RELEASE

Zooming Oil Price Makes "Hot Fuel" Fix More Urgent as Memorial Day Approaches

Consumer Groups Criticize Oil Industry Resistance to Fixing
Hidden Charge at Pump That Costs U.S. Drivers Close to $3 Billion Yearly

Washington, D.C. — As Memorial Day kicks off the summer driving season
and gas prices scrape and sometimes exceed $4 per gallon, U.S. auto and
truck drivers are paying $3 billion a year in hidden charges at the
pump for fuel that expands and loses value as it heats up. (For
information on audio news conference at 11:30 a.m. see note at end of
release.)

"A ‘hot fuel’ surcharge of up to a dime a gallon is concealed from
motorists because they have no way to tell if the fuel they’re buying
is 60 degrees, 90 degrees or more," said Judy Dugan, research director
of the nonprofit, nonpartisan Consumer Watchdog. "Fuel at gas stations
across the street from one another can vary by 10 or 15 degrees, so
drivers have no way to judge the actual value of what they’re buying,
no matter what the posted price."

The nation’s leading advocate for independent truckers, the Owner
Operator Independent Drivers Association (OOIDA), is also protesting
the failure of national regulators to fix this rip-off in the face of
oil industry lobbying. A number of individual truckers are pursuing a
national lawsuit against the deceptive practice.

"The hot fuel scam costs our members at least hundreds of dollars per
year," said John Siebert of OOIDA. "Fuel prices are adjusted for
temperature at every point in the sales chain except the final one to
consumers. It’s high time to end this hidden oil industry subsidy."

Gasoline is sold by volume, and it expands as the temperature rises,
a bit more than 1% for every 15 degree Fahrenheit increase in
temperature. A century-old oil industry standard fixes the assumed
temperature at point of sale at 60 degrees. Yet the average year-round
temperature of gasoline sold in the U.S. today is near 65 degrees.
Summertime temperatures are often drastically higher, especially in
warm states. At 90 degrees, a 20-gallon fill-up costs a driver $1.60
more than it should, because the expanded "hot fuel" loses energy.

A comprehensive investigation by the Kansas City Star published in
August 2006 estimated that U.S. consumers are shorted about 760 million
gallons of gas and diesel per year by hot fuel sales. At the current
average national price of $3.81/gallon, (for today’s prices see www.fuelgaugereport.com), that’s $2.88 billion per year. As U.S. prices increasingly cross the $4 barrier, the hot fuel tab will exceed $3 billion.

At current prices, in hot months in Western and Southern states, car
drivers pay an extra 7 cents to 9 cents per gallon. Even in the
unlikely event that the 18.4 cent a gallon federal gas tax was
suspended for the summer, drivers would be paying half their savings
back to oil companies for hot fuel that has been robbed of its full
energy value.

"Adjusting fuel price to temperature is a matter of simple fairness,"
said Joan Claybrook, President of Public Citizen. "Sending customers
away with less than they paid for is unacceptable in any industry."

Simple, moderately priced technology that adjusts the price at the pump
to account for temperature has existed for decades. In Canada, where
average gasoline temperatures are lower than 60 degrees, the oil
industry lobbied for, and obtained, the right to adjust price to
temperature so consumers wouldn’t benefit from "cold gas." In the U.S.,
however, the industry has lobbied successfully against state
legislation or national regulations mandating temperature-adjusted
pricing.

"The oil industry has taken a classic "heads-we-win-tails-you-lose"
position when it comes to temperature-based differences in fuel value,"
said Judy Dugan, research director of the nonprofit, nonpartisan
Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer
Rights). "In the U.S., oil companies and gasoline marketers argue that
retail temperature-adjusted pricing is unnecessary, even though the
dealers buy wholesale gasoline with a temperature adjustment. In
Canada, they have been more than willing to install retail temperature
adjustment, prompted only by their own profit calculations."

In February, a Federal District Judge in Kansas City denied a motion to
dismiss the national "hot fuel" lawsuit. Sen. Claire McCaskill of
Missouri is sponsoring legislation that would require retail
temperature adjustment over a period of several years.

Independent truckers are hit hardest by the hot fuel premium (large
trucking companies buy their own fuel in bulk and demand that it be
temperature adjusted). The Owner Operator Independent Drivers
Association, based in Missouri, supports the hot fuel lawsuit.

– 30 –

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Blame Exxon for Housing Crisis, Too http://oilwatchdog.org/blame-exxon-for-housing-crisis-too/ http://oilwatchdog.org/blame-exxon-for-housing-crisis-too/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/blame-exxon-for-housing-crisis-too/ 5-22-08 by dugan

The link between skyrocketing oil prices and food prices, for instance, or airline bankruptcies, is obvious and immediate. But the housing crisis? A new study makes the case: a direct correlation between commuting distances and collapsing prices. The group CEOs for Cities, which encourages urban revitalization, says:

A new analysis shows that high gas prices are not only implicated in
the bursting of the housing bubble, but that the higher cost of
commuting has already re-shaped the landscape of real estate value
between cities and suburbs. Housing values are falling fastest in
distant suburban and exurban neighborhoods where affordability depended
directly on cheap gas.

A news release has the short version and the study itself (big pdf alert) has the data and backup. 

Here’s what we used to call in the news business the "nut paragraph"–no, not crazy talk, but the heart of the matter: 

The run-up in gasoline prices has re-written the calculus of suburban housing economics in two key ways.  First, there has been an income effect:  suburban households spend more of their income on transportation and gas and have therefore taken the biggest hit to their budgets.  As a result, they have less income to spend on housing.  Second, there has been a price effect:  because living in distant suburbs requires more driving, potential buyers are now willing to bid less for houses at the suburban fringe.

Yeah, in 1990, with gasoline just above $1.00 a gallon, that 4-bedroom 2-bath out in the fringe ‘burbs made economic sense. At $4.00 a gallon, even $3.00, it can be a choice between commuting and falling behind on the mortgage.

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Brits' Cold Shoulder to Exxon http://oilwatchdog.org/brits-cold-shoulder-to-exxon/ http://oilwatchdog.org/brits-cold-shoulder-to-exxon/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/brits-cold-shoulder-to-exxon/ 8-19-08 by dugan

The shareholder revolt against Exxon is going global. Four big institutional investors in Britain have joined a shareholder resolution demanding that Exxon have an independent chairman of the board, and the new support should bring the chance of passage to about 50-50. Currently, the chairman title is just another perk for CEO Rex Tillerson, whose attitude is from aloof to hostile about renewable energy and climate change. Exxon faces numerous shareholder rebellions at its annual meeting May 28 in Dallas. Another significant one by pension funds and other large investors seeks to fire board member Michael Boskin for ignoring the investors’ multiple requests for a meeting on climate issues.

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Bush Forced to Cap Oil Reserve http://oilwatchdog.org/bush-forced-to-cap-oil-reserve/ http://oilwatchdog.org/bush-forced-to-cap-oil-reserve/#respond Fri, 16 May 2008 15:26:02 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/bush-forced-to-cap-oil-reserve/ White House Forced to Cap Oil Reserve; Should Embolden Congress to Push for More To Drop Energy Prices

Consumer Watchdog Calls for Sales from Reserve, Warning to Refineries, Swift Action on Oil Trading Curbs

Santa Monica, CA — The Energy Department’s announcement that it will
cap taxpayer-funded additions to the federal Strategic Oil Reserve is a
small first step, and a late one, said Consumer Watchdog. Even so, it
is a symbolic move that could drop gasoline prices by several cents
this summer.
 
President Bush, in an abrupt about-face, was forced to act by
Congressional votes to cap purchases for the reserve, and by oil prices
that leaped today above $127 a barrel.
 
Even with this first step, motorists nationwide are likely headed
toward $4.00 a gallon gasoline nationwide this summer, said Consumer
Watchdog. If refineries continue on a path of cutting back production
to increase gasoline prices, any effect from capping the reserve would
be canceled out at the pump.
 
“Both parties in Congress were forced to hear drivers’ anger at both
unaffordable pump prices and the ‘oil tax’ that consumers are paying on
everything from groceries to air travel,” said Judy Dugan, research
director of Consumer Watchdog. “Now Congress has forced the White House
to listen, too. Capping the reserve will signal at least awareness of
the magnitude of the economic problems caused by oil and fuel prices.”
 
It will also save taxpayers at least $90 million over six months, given
the program’s $187 million budget for this year, said Consumer
Watchdog. The actual savings would probably be much larger, given that
the budget was decided long before the rise to even $100 a barrel oil.
 
The effectiveness of this first belated move will depend on whether
government keeps pushing to get speculative markets under control and
prevent refinery profits from eating up any savings from lower oil
prices, said Consumer Watchdog.
 
“At a minimum, the White House should also state its willingness to
“loan” some of the reserve into the market as it did after Hurricane
Katrina, which effectively dampened oil prices,” said Dugan. “Congress
and the White House must also put newly enacted regulation of
speculative trading on a fast track, and hire the financial cops to
detect manipulation.”
 
– 30 –
 
Consumer Watchdog is California’s leading non-profit and non-partisan consumer policy advocacy group.
For more information visit us on the web at: www.ConsumerWatchdog.org  and www.oilwatchdog.org

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Chevron Busts Family Budgets http://oilwatchdog.org/chevron-busts-family-budgets/ http://oilwatchdog.org/chevron-busts-family-budgets/#comments Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/chevron-busts-family-budgets/ Chevron Busts Family Budgets In Struggling California Town Of Casmalia

State PUC Grants Oil Giant’s Water Company 89.7 Percent Rate Increase; Chevron Wanted 138 Percent

Santa Monica, CA — A decision today  by the California Public
Utilities Commission to grant a whopping 89.7 percent water rate
increase to a tiny water company owned by oil giant Chevron means three
years of increasing fiscal agony for the hamlet of Casmalia, Consumer
Watchdog said. The increase will be phased in over that period.

Chevron, which just posted record first-quarter profits of $5.17
billion, had originally sought a water rate increase of 138 percent. 
The average monthly water bill in Casmalia is $115 compared to $40 to
$60 for the same amount of water provided by other agencies in Santa
Barbara County.  Under the new rates, Casmalia’s average monthly bill
would soar to $148 immediately. In 2009 it would rise to $183 and in
2010 to $217. Under Chevron’s initial plan the average monthly rate
would have been $272.

“Folks in Casmalia are in a special class,” said John M. Simpson, an
advocate with Consumer Watchdog. “All Californians get shafted by
Chevron when they go to the gas pump. Only residents of Casmalia get
shafted a second time when they go home and drink a glass of water.”

In a letter to the Public Utilities Commission before today’s meeting,
Casmalia Community Services District President Bill Ostini wrote, “If
this increase is granted, it will signal the beginning of the end for
us."

Village officials estimate the median household income for the town is
around $30,000. The final Chevron water bill would swallow nearly 9
percent of that income.

Casmalia is 1.5 miles north of Vandenberg Air Force base. In the early
1900s, the population was 1,500. It’s since dwindled to around 200, and
the town is perhaps best known for the Hitching Post Restaurant. From
1973 to 1989 the notorious Casmalia Resources Hazardous Waste Facility
operated a mile north of town. During the time it was in business, the
toxic dump received more than 4 billion pounds of waste from around the
Golden State. Fumes regularly blew into town and sickened residents.
Those days are over. Now the site is the target of an EPA Superfund
cleanup, and Chevron is involved as a member of the Casmalia Steering
Committee.

Casmalia gets its water from the Casmite Water Corp., owned by Chevron.
Casmite has provided Casmalia’s water since the 1940s, when it had oil
operations in the area. Unocal acquired Casmite in 1953, and then
Chevron swallowed up Unocal in 2005.

"Oil giant Chevron, needs to harness some of the ‘human energy’ it
touts in a multimillion dollar ad campaign and solve this community’s
problem,” said Simpson, “We’re talking about amounts that aren’t even
pocket change for Chevron, but an 89.7 percent water rate increase on
top of already exorbitant rates will kill Casmalia. PUC regulations may
allow Chevron to do this, but that doesn’t make it right. If I were a
Chevron executive, I would be embarrassed by what’s happened in
Casmalia."

Consumer Watchdog said Chevron should follow the example of oil company
Atlantic Richfield when it faced a similar situation in New Cuyama in
1977. The oil company turned over their small water agency along with
$1 million to run it to the Community Services District.

Read an opinion piece in today’s San Francisco Chronicle about the Casmalia water situation.

– 30 –

Consumer Watchdog is California’s leading non-profit and non-partisan consumer watchdog group.

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Climate Heat on Exxon http://oilwatchdog.org/climate-heat-on-exxon/ http://oilwatchdog.org/climate-heat-on-exxon/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/climate-heat-on-exxon/ 5-13-08 by dugan

Oh, man, I wish I had a share of Exxon. The shareholder meeting May
30 is going to be a show. A group of big institutional investors,
mostly public pension funds, has filed notice that it will formally campaign to oust board member Michael Boskin. The investors say he refused repetedly to
even meet with them about developing a corporate climate change policy.
How dumb can a company get, refusing to sit and talk with its biggest
investors?

These trillion-dollar investors have been pushing the company
for a couple of years to develop a climate change policy and make it
part of Exxon’s business plan. No luck. Now they’ve stepped up the
action. An SEC filing disclosed today
by Exxon consists of a letter the investor coalition is sending to
shareholders, listing the reasons Boskin should be  ousted. 

The
group last year announced it would withhold support for the reelection
of Boskin, who was reelected despite the nonvoters. A resolution
demanding that Exxon do more on climate change, however, garnered a surprising 31% shareholder vote.

This year’s communication by the big investors to other shareholders appears to be turning up the heat a substantial notch.

The
shareholder letter is in the name of Connecticut state Treasurer Denise
Nappier, on behalf of other big investors. In the past, the climate
change group has included California State Teachers Retirement System
(CalSTRS), the California state employee benefit fund (CalPERS),
F&C
Management Ltd., Illinois State Board of Investment, New York City
Employees Retirement System, New York State Common Retirement Fund, the
California, Connecticut, Maine, Maryland, North Carolina and Vermont
State Treasurers, labor funds such as SEIU and AFSCME, and a dozen
other investors.

This year, the effort to demand a climate change policy at Exxon has been joined by the Rockefeller family,
descendants  of Standard Oil/ExxonMobil founder John D. Rockefeller. It
is not clear from the letter whether they are joining the effort to
oust Boskin. 

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Tax Refunds Going to Gas Tanks http://oilwatchdog.org/tax-refunds-going-to-gas-tanks/ http://oilwatchdog.org/tax-refunds-going-to-gas-tanks/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/tax-refunds-going-to-gas-tanks/ Gas Up 11 Cents In Week, 34 Cents In a Month; Consumers’ Tax Incentive Going Straight to Gas Tanks

White House Scorns Action, Congress in Gridlock as Soaring Prices Push Inflation, Motorists Cry ‘Uncle’

 

CONTACT: Judy Dugan, 310-392-0522, ext. 305, or cell: 213-280-0175

May 12, 2008

Santa Monica, CA — An 11-cent rise in gasoline prices in one week will
put the reins on consumers who would like to spend their $300 to $600
federal tax incentive on something frivolous, like an extra sack of
groceries or repairing the roof, said the nonprofit, nonpartisan
Consumer Watchdog today. The pain of prices at the pump is only made
worse by government’s inaction to curb the financial speculation that
is driving oil prices and profiting oil companies at the expense of the
economy.

The federal Energy Information Agency reported today that the price of
regular gasoline was at $3.722, up from $3.613 a week a go and $3.389
four weeks ago. Diesel’s rise was even higher, from $4.149 to $4.339 in
a week.

“Gasoline prices alone are making drivers cry ‘uncle,’ but diesel costs
may be an even larger hit on family budgets,” said Judy Dugan, research
director of Consumer Watchdog (formerly The Foundation for Taxpayer and
Consumer Rights). “Farmers are having to pass through diesel and
petroleum-based fertilizer costs, while truckers and shippers face a
choice between bankruptcy and passing along the cost of their $600
fill-ups. It’s a no-win for everyone except energy traders and oil
companies.”

Consumer confidence is at modern lows, noted the watchdog group, and
credit card debt is rising due to both fuel prices and food costs.

“Congress has put forth a bucketful of proposals, but even a modest
plan to put some oversight on out-of-control energy trading faces a
White House veto, because it’s stuck inside a farm bill that the
president dislikes,” said Dugan. “The Senate can’t even get it together
to cancel some of the oil companies’ unnecessary taxpayer subsidies.
It’s like forcing the cleaning lady to pay a yearly bonus to her CEO
employer.”

(See more on Consumer Watchdog’s assessment of White House and Congressional proposals here.)

Consumer Watchdog urged Congress to move swiftly on a resolution urging
the White House to stop using taxpayer funds to fill the federal
Strategic Petroleum Reserve with record-priced oil. Spiking fuel prices
and economic insecurity currently make selling some of that oil a
better national security priority. Just halting purchases for the
reserve would reduce fuel prices at least slightly and possibly
substantially, said Consumer Watchdog. Estimates of the effect range
from 3-5 cents a gallon to over 20 cents a gallon.

“It’s crucial for government to move faster on more sources of
renewable energy, and better public transportation, but it’s just as
important to give help consumers stuck with an auto-based economy until
alternatives are in place,” said Dugan. “Calls in some corners for
$10-dollar gasoline as a way to bring down consumption ignore the
disaster that this would be for the working and middle classes.”

Consumer Watchdog’s proposals for bringing down fuel and energy prices
while encouraging stronger development of renewable energy include:

– Action by President Bush to stop adding to federal Strategic
Petroleum Reserve and sell from the reserve to stabilize and drive down
oil futures price.  (Read Consumer Watchdog’s letter to the White House here.)
 
– Closure of 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 regulate trading markets to help stop
speculative oil pricing. This measure was inserted in the federal farm
bill, which Bush has vowed to veto. The regulatory bill should be
reintroduced on an emergency basis as a stand-alone bill. Regulators
should separately  increase the amount of margin funds that most
traders must put up in energy markets to help suppress speculation. (See more on Enron loophole and farm bill here.)

– Senate approval of an alternative fuels bill (HR 5351) 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 block
passage. A similar House measure was removed from the federal energy
bill by the Senate last year under pressure from the oil lobby.
 
– 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 gasoline production.
 
– 30 –

Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer
Rights) is a leading nonprofit, nonpartisan consumer advocacy
organization.

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Exxon Is Holdout on MTBE http://oilwatchdog.org/exxon-is-holdout-on-mtbe/ http://oilwatchdog.org/exxon-is-holdout-on-mtbe/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/exxon-is-holdout-on-mtbe/ 5-8-08 by dugan

A national lawsuit over water pollution from a gasoline additive was more than half-settled yesterday when four of the five major oil comanies agreed to pay $423 million in cleanup and other costs. Chevron, Shell, BP, Conoco and several smaller companies did what’s right, and will escape years more of litigation costs. Exxon, which can no doubt afford to litigate until the world ends, was the only major holdout.

The suits, being heard in a New York court, involved the gasoline additive MTBE, or methyl tertiary butyl ether, which was mixed with gasoline for cleaner burning in the 1980s and 1990s. The chemical leaked from underground tanks and ultimately polluted groundwater supplies in many states, endangering drinking water. 

Exxon’s response to the settlement was that it was just doing what government wanted, and has no liability. I haven’t seen any news reports on the settlement that challenge this "government made me do it" statement. However, oil companies chose to use MTBE, rather than other clean-air oxygenates like methanol or ethanol, in part because their own chemical divisions manufactured MTBE. And even before MTBE went into use, oil industry insiders were privately warning of its pollution danger.

Excerpts from a long report, linked above, by the Environmental Working Group:

In a 1995 deposition, a top ARCO executive admitted under oath, "The
EPA did not initiate reformulated gasoline…." He clarified that "the
oil industry… brought this [MTBE] forward as an alternative to what
the EPA had initially proposed." [Excerpt | Full document]

By 1986, the oil industry was adding 54,000 barrels of MTBE to
gasoline each day. By 1991, one year before the EPA requirements went
into effect, the industry was using more than 100,000 barrels of MTBE
per day in reformulated gasoline. [View document]
Yet secret oil company studies, conducted at least as early as 1980,
showed the industry knew that MTBE contaminated ground water virtually
everywhere it was used.

Oil Companies Knew MTBE Was a Threat to Water Supplies

Even though MTBE was not classified as a probable cause of cancer in
humans until 1995, refiners knew much earlier that its powerfully foul
taste and smell meant that small concentrations could render water
undrinkable, and that once it got into water supplies it was all but
impossible to clean up. A Shell hydrogeologist testified in the South
Lake Tahoe case that he first dealt with an MTBE spill in 1980 in
Rockaway, N.J., where seven MTBE plumes were leaking from underground
storage tanks. [Excerpt | Full document]
By 1981, when the Shell scientist wrote an internal report on the
Rockaway plumes, the joke inside Shell was that MTBE really stood for
“Most Things Biodegrade Easier.” Later, other versions of the joke
circulated, including “Menace Threatening Our Bountiful Environment,”
or apropos to the present attempt to limit liability, “Major Threat to
Better Earnings.” [Excerpt | Full document] and [Excerpt | Full document]

In 1983, Shell was one of at least nine companies surveyed by a task
force of the American Petroleum Institute on “the environmental fate
and health effects” of MTBE and other oxygenates. Shell’s Environmental
Affairs department replied to the trade association: “In our spill
situation the MTBE was detectable (by drinking) in 7 to 15 parts per
billion so even if it were not a factor to health, it still had to be removed to below the detectable amount in order to use the water.” (emphasis added). [View document]
The survey, the results of which were later distributed to all API
members, asked for information about the number and extent of spills,
chemical analysis of the spill and the contaminated water, and health
effects to people in the community.

Clearly, Shell was not the only company that knew about MTBE
problems. An environmental engineer for ExxonMobil (the companies
merged in 1999), testified that he learned of MTBE contamination from
Exxon gasoline in 1980, when a tank leak in Jacksonville, Maryland,
fouled wells for a planned subdivision. The ExxonMobil engineer said it
was learned MTBE had also leaked into the subdivision’s wells from a
Gulf and an Amoco station. [View document]

 

 

 

 

 

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Exxon Posts More Record Profits http://oilwatchdog.org/exxon-posts-more-record-profits/ http://oilwatchdog.org/exxon-posts-more-record-profits/#respond Thu, 01 May 2008 10:31:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/05/exxon-posts-more-record-profits/ NEWS RELEASE

May 01, 2008

ExxonMobil Profits Soar to Record On Speculative Oil Prices While Consumers and Economy Suffer

Santa Monica, CA — Record first-quarter profits, up a staggering 17
percent to $10.89 billion reported today by ExxonMobil, the world’s
largest oil company, came as the result of crude oil profits driven by
unregulated speculative trading, said Consumer Watchdog.  Soaring
gasoline and diesel prices have devastated the U.S. economy and helped
push consumers deeper into debt, yet President Bush and Congress have
engaged in mindless finger-pointing and failed to take obvious steps to
ease the pain.

“With gasoline prices topping $4 a gallon in some cities and averaging
$3.60 nationwide, nobody is surprised to see the latest string of
outrageous profits posted by Big Oil,”  said John M. Simpson, consumer
advocate with Consumer Watchdog (formerly the Foundation for Taxpayer
and Consumer Rights). “But what people cannot understand — and will
not forget — is that their elected representatives are shirking their
responsibility to take obvious steps that will ease the crisis.”

“People are driving less, but for every trip they cancel, rising prices
at the pump more than wipe out their savings,” said Simpson. “They pay
a second time as inflation at the grocery store is driven by fuel
surcharges on every truck delivery.”

The nonprofit, nonpartisan Consumer Watchdog and its Oilwatchdog.org
project have called for action to quell market speculation and cut back
taxpayer subsidies to oil companies (see below), but the most obvious
immediate action is for the White House to stop buying market-priced
oil for the federal Strategic Petroleum Reserve, which is at record
high levels above 700 million barrels, and start selling a fraction of
the reserve back into the market.

At a Rose Garden News Conference this week Bush refused to stop
purchases for the reserve.  He also blamed Congress for not allowing
oil drilling in the Arctic National Wildlife Refuge (ANWR) even though
it would take a decade before oil could be obtained if drilling were
allowed today.
 
“Purchases for the reserve, at these record oil prices, come straight
from the pockets of taxpayers, and by taking oil off the market they
fuel continued speculation,” said Judy Dugan, Consumer Watchdog
research director. “Yet President Bush has turned a deaf ear on pleas
by Congress and consumer advocates to take the small, painless and
beneficial step of curbing this excess. There is no strategic benefit
more important than using the oil reserve to aid consumers and offset
energy inflation.” (See Consumer Watchdog’s letter to President Bush here.)

Exxon’s profits were a record for a first quarter and were the second
highest ever for any U.S. corporation.  Exxon’s 2007 fourth quarter
earnings of $11.66 billion are the all time record. During the first
quarter of 2008 the oil giant piled up profits at the rate of $5.08
million an hour or $84,000 every minute. (See more historical data at Consumer Watchdog’s “Oil Profits Monster” database. Quarterly data and charts for Shell and BP will be updated by 11 am PDT.)

With the announcement of record profits, Exxon also said it had bought back $8 billion in its own shares.

“This is money that could have been used to lower prices for consumers
and invested in alternative energy research,” said Simpson. “Instead the company is taking a short-term, profit-maximizing approach that has even upset some of its most important shareholders.”

On Wednesday descendents of John D. Rockefeller, who founded Standard
Oil, ExxonMobil’s precursor, called a news conference in New York to
say the oil giant is overlooking its effect on the environment and the
future of alternative energy. They also backed a resolution that would
split the roles of chief executive officer and chairman, now held
jointly by Rex Tillerson.

“When America’s first family of oil speaks, ExxonMobil should pay attention,” said Simpson.

Tell ExxonMobil to shift its massive profits away from investing in oil, and towards renewable energy sources!

Exxon’s refining profits did not match the increases from oil sales,
but that was in part because the oil giant is selling its own petroleum
at inflated prices to their own refineries, said Consumer Watchdog. The
current upward spike in pump prices is unlikely to stop even if crude
oil prices abate, because refiners are now working to boost profits on
their end of the business.
 
“When one uses the spreadsheet to compare the price at the pump with
the quarterly company profit reports, it is clear the companies have
inflated bottom lines by raising pump prices far in excess of any
actual increased cost incurring from the highly publicized increase in
the commodity price of crude,” said Tim Hamilton, independent oil
analyst. “Since the average pump price for regular unleaded was back at
$3.11 during the first quarter, next quarter profit reports can be
expected to reflect prices approaching $4 at the pump and set yet
another new record.”

 
Consumer Watchdog has called for:
 
– Action by President Bush to stop adding to federal Strategic
Petroleum Reserve and sell from the reserve to stabilize and drive down
oil futures price.  Link to CW letter to White House.
 
– Closure of 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 regulate trading markets to help stop
speculative oil pricing. (See more on Enron Loophole and farm bill amendment.)
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 (HR 5351) 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 block
passage. A similar House measure was removed from the federal energy
bill by the Senate last year under pressure from the oil lobby.
 
– 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 gasoline production.
 
Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer
Rights) is a leading nonprofit, nonpartisan consumer advocacy
organization.
 
For more information, see www.consumerwatchdog.org or www.oilwatchdog.org  
 
– 30 –

 

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Exxon Hit For Its Secrecy http://oilwatchdog.org/exxon-hit-for-its-secrecy/ http://oilwatchdog.org/exxon-hit-for-its-secrecy/#respond Tue, 30 Nov 1999 00:00:00 +0000 http://server11.fusednetwork.com/~oilwatch/2008/04/exxon-hit-for-its-secrecy/ 04-29-08 by simpson

Oil giant ExxonMobil is as secretive as its competitors in Russia and China, according to a report just released by Transparency International, a global organization fighting corruption.

"The tragic paradox, that many resource-rich countries remain poor, stems from a lack of data on oil and gas revenues and how they are managed," Huguette Labelle, chairperson of Transparency International, told the BBC. "Companies must do more to increase transparency."

Exxon received the lowest rating with China’s CNOOC and Russia’s Lukoil.

Other Big Five oil companies were rated better. BP, Chevron and Conoco-Philips were all rated "medium" for transparency in their financial dealings. Shell received a "high" rating.

Transparency International said companies should report the revenues paid to individual governments of countries for extraction rights.  With more information available on how the oil companies operate, it would be easier to target corruption, the organization said.

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