Fuel Fears, Price Hikes & Gas Gouging
Thursday, September 01, 2005SUSIE GHARIB: Relief and rescue efforts are in high gear tonight all over the United States to help the victims of hurricane Katrina. Congress is coming back early from summer recess to approve the administration`s request for $10 billion to cover immediate needs and businesses all across the country are pitching in with supplies and cash to help where they can. But it`s going to be a long haul and Americans are going to have to deal with one key area of fallout: high gasoline prices. We have two reports tonight looking at how energy futures are trading and whether gas price gouging is a threat. We begin with Erika Miller in New York.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was another intense day of trading in gasoline futures at the New York Mercantile Exchange. Traders reported panicked buying.
IRA ECKSTEIN, OIL TRADER, AREA INTERNATIONAL TRADING: This is the most crazy it`s been since I`ve been trading for over 15 years.
MILLER: Wholesale gasoline for October delivery jumped $0.15 to $2.41 a gallon. The rally`s cause was clear: continued uncertainty about the impact of hurricane Katrina.
ROBERT MORRIS, OIL ANALYST, BANC OF AMERICA SECURITIES: What`s going on here is you`ve shut down a lot of refineries on the Gulf coast and a majority of our gasoline production is from those refineries on the Gulf coast.
MILLER: Crude oil futures also rose today, despite the government`s decision to release emergency petroleum reserves. ExxonMobil is one company that plans to borrow crude from the government`s stockpile: six million barrels. But experts don`t expect this extra supply to be much benefit in bringing down gasoline prices.
ECKSTEIN: We haven`t had a new refinery in, let`s say, 20, 30 years. They can deliver us as much crude as possible. We can`t refine it.
MILLER: That`s why AAA said regular unleaded hit a record today, an average of $2.68 a gallon. That`s up 18 percent from a month ago and up 44 percent from a year ago. But $2.68 sounds like a dream to motorists in many parts of the country where prices have soared above $3 a gallon. That increase has many people outraged. It`s ridiculous
MILLER: But others are taking the price spike in stride. I`m Italian, it`s like $8 a gallon back home.
MILLER: Some drivers fear the return of long lines and scarcity that were common during the gasoline crises in the 1970s. Analysts don`t expect that to happen and they say prices should peak in the next few weeks.
MORRIS: To get $5, I think you`d have to see oil prices go to $80, $90 a barrel. To see $4 gasoline, I think you`d have to see more interruptions, more problems, whether it was in the Gulf of Mexico or in the Middle East.
MILLER: Analysts expect gasoline prices to retreat after electricity is restored to most Gulf coast pipelines and refineries. Unfortunately, that could take several weeks at least. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: I`m Stephanie Dhue. In some parts of the country, prices at the pump seem to be heading higher by the hour. At this station in Georgia, prices topped $6 a gallon. Those kinds of spikes have states around the country investigating complaints of price gouging. Florida Attorney General Charlie Crist issued subpoenas to oil wholesalers who jacked up prices as much as $0.73 a gallon in the past 48 hours.
CHARLIE CRIST, ATTORNEY GENERAL, FLORIDA: We issued the subpoenas today. They have 20 days to get this information back to us about their accounting practices, their pricing procedures and whether there is a legitimate rationale for why the increases occurred as extraordinary as it is.
DHUE: But with serious supply disruptions, gouging can be hard to prove at the wholesale and retail level.
JUSTIN MCNULL, SPOKESMAN, AAA: There certainly is a gray area. To see at what point a gasoline retailer who knows I just have a couple hundred gallons left, I`m not getting another replacement shipment because my branded station is just supplying the people that they`re under contract with, to say "I`ve got to make these 500 gallons last, let me charge more for it."
DHUE: The Department of Energy has received over 5800 complaints of price gouging and will refer some of those to the Federal Trade Commission for investigation. But consumer advocates say it will be difficult to find price gougers.
MARK COOPER, RESEARCH DIRECTOR, CONSUMERS FEDERATION OF AMERICA: Two-thirds of the states or 60 percent of the states, don`t even have laws that would let them define the problem. And even if they found that few people, they would not address the underlying disease.
DHUE: President Bush says the supply disruptions will be temporary and he urged Americans to conserve energy.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Americans should be prudent in their use of energy during the course of the next few weeks. Don`t buy gas if you don`t need it.
DHUE: News today that the colonial pipeline, which supplies much of the east coast, is back on line may help ease prices at the pump. But it`s still only operating at 50 percent capacity. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
