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Gas pump
11.11.05
Politics and Economy:
Pain at the Pump
More on This Story:
Gas Price Politics

Americans love their cars and cars rely on gasoline — thus it isn't surprising that record-high prices are making news on Capitol Hill as well as on Main Street. The headlines reflect the tenor of the times: "Big Oil CEOs Under Fire In Congress," "Senators Grill Oil Executives on Prices and Profits." Industry analysts project that home heating bills will be 50 percent higher this winter, and although they've dropped in recent weeks, gas prices are still up 56 percent over last two years. At the same time, industry profits are at an all-time high. The high profits had senators talking tough to oil industry executives. Senator Pete Domenici (R-NM) said "My constituents think someone rigged the price and someone - them - is getting ripped off." He went on to ask point blank: "Are you rigging the price of oil?"

What are the profits that are raising eyebrows? Exxon Mobil, Chevron, ConocoPhillips, BP and Royal Dutch/Shell reported total earnings last quarter of nearly $33 billion. The industry's third-quarter profits jumped 62 percent. And, Exxon Mobil, the nation's biggest oil company, posted the biggest corporate profit in history.

Lee R. Raymond, Exxon's chairman and chief executive defended the profits stating: "We are in line with the average of all U.S. industry. Our numbers are huge because the scale of our industry is huge. How are these earnings used? We invest to run our global operations, to develop future supply, to advance energy-producing and -saving technologies, and to meet our obligations to millions of our shareholders." Some senators and consumers are not so sure. There is talk of instituting a "windfall tax" on the high profits. And, separately, the same week, the Federal Trade Commission issued dozens of subpoenas to energy companies in an investigation into possible price-gouging. (Read the transcript of the hearings.)

Average Retail Gas Prices: November 7, 2005
Regular Grade Dollars per gallon, including all taxes:

California: this week/change from last year:  2.569 /0.318
Colorado: this week/change from last year:  2.466 /0.520
Florida: this week/change from last year:  2.544 /0.508
Massachusetts: this week/change from last year:  2.337 /0.330
Minnesota: this week/change from last year:  2.161 /0.273
Ohio: this week/change from last year:  2.151 /0.261
Texas: this week/change from last year:  2.294 /0.417
Washington: this week/change from last year:  2.551 /0.490

You can find out the average price in your locale by using the AAA's Fuel Gauge Report. The AAA also offers tips on cutting gas consumption. Of course, when compared with gas prices in other countries, U.S. prices might not seem so bad. THE ECONOMIST recently called America's gas taxes "pitifully low" and suggested that "a higher petrol price in America would send a strong price signal to the markets that efficiency matters."


Gas Prices Worldwide: October 24, 2005
U.S. Dollars per gallon, including taxes/excluding taxes

Belgium:  5.85/ 2.15
France:  5.49/ 1.92
Germany:  5.90/ 2.12
Italy:  5.87/ 2.34
Netherlands:  6.40/ 2.37
United Kingdom:  6.27/ 2.18
United States:  2.82/ 2.43

Source for figures: Department of Energy, Energy Information Administration. You can also get up-to-date information from The Department of Energy's "This Week in Petroleum." Additional sources: THE ECONOMIST, THE NEW YORK TIMES. THE WASHINGTON POST. CNN/MONEY

Resources

American Petroleum Institute
the primary trade association of that industry, API represents more than 400 members involved in all aspects of the oil and natural gas industry. Their Web site offers information on API policy stances, consumer information and an education section for schools.

Energy Information Administration
This branch of the Department of Energy offers statistical information on everything to do with energy. The site offers a primer on how gas prices are determined and weekly updates on energy markets, nation and worldwide.

The Foundation for Taxpayer & Consumer Rights
The Foundation for Taxpayer and Consumer Rights (FTCR) is a consumer advocacy group founded in 1985. The Energy section of the group's Web site contains studies on gas pricing and information on the Bakersfield, California refinery.

Oil & Gas Journal
The Oil & Gas Journal is a widely read petroleum industry publication. The Web site provides technology information, news, statistics, special reports, and industry analysis.

Public Citizen
Public Citizen is a national non-profit public interest organization "protecting health, safety, and democracy." Founded by Ralph Nader, the Web site's energy section presents information on mega-mergers in the petroleum and gas-pricing policies.

New Forces at Work in Refining: Industry Views of Critical Business and Operations Trends
Rand Corporation report by D. J. Peterson and Sergej Mahnovski on oil pricing trends and refining policies. The document reports the results of discussions with representatives of refining firms, technologies and services providers, research institutions, and other organizations on current and future trends in the U.S.

Senator Ron Wyden (D-OR)
The Senator's Web site documents his work on gas price issues.

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