3-26-08 by dugan
Hey, California, how about $4.35 a gallon for regular? A study released today (Here’s the press release. Here’s the study) by the Consumer Federation predicts pump prices could rise another 75 cents a gallon if refiners are able to cut back production and boost their profits to last year’s level. Its conclusion? Government has to be a better watchdog:
"As consumers anxiously eye the fluctuations in the price at the pump, policy makers
should cast a wary eye on refiners. Our analysis has shown that since the turn of the century
the tight oligopoly in the refining sector has played a key role in the price escalation, but the
industry always responded that it was just supply and demand.35 Now that the supply and
demand fundamentals are pointing in a downward direction, it will be interesting to see if the
industry comes up with another excuse, if prices continue to rise."It is critical for policy makers to ensure that the 2007 Energy Independence and
Security Act” is implemented vigorously since it emphasized the two key long-term elements
that can help consumers escape from the grip of both the domestic refining oligopoly and the
crude oil cartel – expansion of alternative fuels and reduction of demand through increased
fuel economy."
To that, OilWatchdog would add, policy makers should be putting a lid on unregulated speculation in energy trading and regulating refineries enough to curb artificial restrictions of supply.
The detailed Consumer Fed analysis, by longtime expert Marc Cooper, is sober and fact-filled. It comes to some of the same conclusions as OilWatchdog’s report last year, "The Katrina Syndrome," on refineries’ restriction of supply to spike profits–but adds the new wild card of ethanol, which currently costs less than gasoline and is putting upward pressure on supply.
Prices could go either way, says Cooper. But I wouldn’t count out the ability of oil companies to keep the profit train rolling–Exxon didn’t get to be the biggest corporation in the world by being fair to consumers.