Soaked at the Pump
By Matt Bivens
Friday 29 August 2003
On the East Coast this week, gasoline prices hit an all-time high average of $1.69, according to the Energy Department; on the West Coast, drivers faced prices of $2.05. (The Energy Information Administration, which tracks prices, has a neat region-by-region breakdown here.)
There's no end of soothing explanations offered for skyrocketing gas prices, and assurances that they'll fall again in a few weeks.
But let's cut to the chase: Prices soar not because it's "the summer driving season," or because an Arizona pipeline breaks down, or a few refineries go without electricity for a few days. C'mon. Prices soar because -- as long-time automobile-and-oil-industry watchers like Public Citizen observe -- we've concentrated tremendous market-dictating power in just a handful of big oil companies, and we don't regulate them very well. We don't, for example, require them to keep minimal reserves or inventories on hand, which is what we demand of, for example, the electric power system.
Five big oil companies -- ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Shell -- now control 61 percent of the gas station pumps in America, and also roughly half of our oil refinery markets and domestic exploration and production. "It is no surprise that gasoline prices are skyrocketing as we approach Labor Day weekend," says Public Citizen's Wenonah Hauter. "This is what you get when you have a handful of mega-corporations dominating the market, and it is what we predicted when the Federal Trade Commission (FTC) allowed massive consolidation of the oil industry in 1999 and 2000."
Public Citizen thinks Congress should hold investigative hearings into the Labor Day weekend gas price hikes. The FTC's own schizophrenic reports suggest someone ought to step up and mind the store. Consider the FTC's March 2001 study into a spike in Midwest gasoline prices -- which found that everything was OK and above-board even though the price spike was partly driven by "conscious (but independent) choices by industry participants" to intentionally withhold supplies. (Which industry participants? FTC says that's secret. But I'll give you five guesses.)
So the oil majors regularly pull this wide-eyed act with us, and pronounce themselves dismayed that it's summer again, and people are driving cars, and paying the oil companies more than ever before, isn't it awful? And then, to keep things murky, they also throw in some mumbo-jumbo about how this truck full of oil got a flat tire in Utah, and then there were six unusually sunny days in a row, and Mars is closer to Earth than it's been in 60,000 years, and Bob lost the keys to the refinery storeroom.
The "energy bill" before Congress, by the way, does nothing to help with any of this -- not in regulating the oil companies, not in demanding fuel economy of cars. It does, however, find billions and billions more of your tax dollars to give away to already-wealthy Big Oil. Why? Because Congress can. Meanwhile, consider that in addition to the national average of $1.75 per gallon of gas, our military policing of the Middle East way back in peace-time days -- before the Iraq war -- was already costing us about $60 billion a year. Which worked out then to an additional $1.58 per gallon.
Jump to TO Features for Monday 01 September 2003