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Oil Companies Will Make $82 Mil in Excess Profits from Calif. Drivers Over July 4 Holiday | Oil Watchdog

Press Release

Oil Companies Will Make $82 Mil in Excess Profits from Calif. Drivers Over July 4 Holiday

CONTACT:

Fri, Jun 30, 2006 at 12:36 pm

    Oil Companies Will Make $82 Mil in Excess Profits from Calif. Drivers Over July 4 Holiday

    NEWS RELEASE:
    June 30, 2006

    CONTACT: Judy Dugan, 310-392-0522 x305, cell 213-280-0175 or Jamie Court, x327, or Tim Hamilton, 360-495-4941

    At least 41 cents per gallon goes to increased profits, group says.

    Santa Monica, CA — Oil companies will make at least $82 million in excess profits from California motorists during the four and a half day holiday weekend, according to the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights.

    This figure is extremely conservative, and based on the oil companies’ own reports to the California Energy Commission, said FTCR. In the first week of January 2006, the energy commission showed California refiners reporting "costs and profits" (they do not report profits separately) of 30 cents per gallon on major-brand gasoline. Last week, the same figure was 71 cents. Since refinery operating costs do not vary like oil prices, the difference of 41 cents can only be calculated as additional profit.

    Average daily gasoline sales figures, also from the energy commission, were 44.5 million gallons a day during July 2005. Over the four and half days of this year’s long holiday weekend, beginning at about midday Friday, that would come to a little over 200 million gallons of gasoline, and at 41 cents of excess profit per gallon, that’s $82 million that Californians are paying, over and above gasoline profits in January, said FTCR.

    These indirect calculations by FTCR and independent oil analyst Tim Hamilton give the oil companies every benefit of the doubt and come on top of the already record profits they were reaping at the beginning of this year. For example, the energy commission assumes the oil companies pay market price for crude oil, even though most it is either harvested from the companies’ own fields, or bought on cheaper long-term contracts. "The $82 million figure is grossly unfair to California drivers, who continue to pay a pump price well above the rest of the nation," said Judy Dugan of FTCR. "What Californians need is an Independence Day from record oil company profits and massive executive salaries."

    "California drivers have few alternatives to driving and oil companies are fully prepared to use this leverage to increase profits to new record highs," added Hamilton. "Left unchecked, there is no end in sight to their squeezing of California drivers."

    To tame gasoline costs and reduce dependence on the increasingly concentrated oil industry, FTCR recommends:

    -Passage of a November ballot measure to support vigorous research and development of alternative fuels. It would be funded by a profit-based levy on oil companies that extract oil in California, brining the state in line with other major oil-producing states.

    -Passage of a more vigorous price-gouging law as proposed earlier in June by Atty. Gen. Bill Lockyer and Assembly Speaker Fabian Nuñez. The measure, even though it was substantially weakened by amendments, is stalled in the state Senate. It must be revived in the next legislative session.

    -Updating of antitrust laws, both federal and state, to deal with an oil industry so concentrated that it can collude to keep gasoline prices high without making deals in a back room.

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