One on One with Dennis Decota, Exec. Dir. California Service Station & Automotive Repair Association
Friday, May 23, 2008
|
|
|
|
SUSIE GHARIB: Many Americans won't be hitting the road this Memorial Day weekend, because of soaring gasoline prices. As we reported this week in our series, "Pain at the Pump," consumers, businesses and governments are struggling with $4 gas. Tonight, another perspective from a gas station owner and head of a service station trade group. Earlier, I talked with Dennis Decota, who disputes claims by big oil companies that they make just $0.04 on every gallon of gas.
DENNIS DECOTA, EXEC. DIR., CALIFORNIA SERVICE STATION & AUTOMOTIVE REPAIR ASSOCIATION: What they're not telling you is the sheer volume of what they retail in the way of gasoline. Just in California alone, which I'm most familiar with, they pumped a little over 1.2 billion gallons just in January. You take that times $0.04, it adds up rather quickly. And I don't want believe the $0.04. I believe that they would like us to think that. What do they really pay for a barrel of crude oil?
GHARIB: What about the pricing of gasoline? Are the major oil companies united in setting the price or does it vary company to company?
DECOTA: No, it really truly is a -- the oil companies price is in lockstep with one another. They follow each other closely. I mean, on the retail end of it, at the street level, on wholesale pricing, sometimes it's within tenths of a cent between one major and the other. In California, one of the largest gasoline markets in the world, only next to the U.S. as a total, they have a situation here where six major oil companies actually control 98 percent of the gasoline market.
GHARIB: You have been in this business for almost 30 years now. What do you think it's going to take to bring gasoline prices down? Is it supply or is it making more fundamental changes?
DECOTA: Well, it's both. I mean, quite honestly, what has happened is the oil companies have masterfully been able to take and have the proverbial hand on the spigot so to speak. You control pricing issues with supply. The refineries today are running at about 87 percent capacity. They could run up to 92, 93 percent very effectively. That in itself would greatly lower gasoline prices. When you have just-in-time inventory, you can charge a premium price for something in demand and that's exactly what's happening.
GHARIB: What can governments do, state and Federal governments to bring down the price of gasoline?
DECOTA: Government needs to get more involved. If we go back it history and we remember the Rockefeller era and how they came about, and they put the controls and the anti-trust laws into place and they kept these companies from merging and they created competition amongst the companies. The consumers enjoyed a long-term price advantage. Today what's happened is they've gone full circle. They've -- those anti-trust laws have been put on the back burners. Our courts haven't enforced them. The Federal Trade Commission and many of the elected officials, you know, really find it quite advantageous to allow the oil companies to run wild with these pricing issues.
GHARIB: Dennis, given the high price of gasoline, a lot of people, a lot of Americans are deciding not to go on long-distance driving trips this summer. What is your organization's forecast for summer driving outlook?
DECOTA: I think the average family is going to stay home this summer. I think you're going to find our members feel that their volumes are going to diminish greatly because of the high price of gasoline.
GHARIB: Dennis, thank you so much for your thoughts on this subject.
DECOTA: Thank you.
