[Corporations] Rising Gas Prices Caused by Unchecked Corporate Behavior

[Mike Ewall]

Public Citizen's Critical Mass Energy Program
http://www.citizen.org/cmep/

News Release

September 21, 2005 Contact: Tyson Slocum (202) 454-5191
               Erica Hartman (202) 454-5174

Rising Gasoline Prices Aren't Wholly Caused by Hurricane Katrina, 
Public Citizen Tells Senate

Consumer Group Says Corporate Mergers Are Partly to Blame for 
Price-Gouging of Consumers at the Pump

WASHINGTON, D.C. – High gasoline prices cannot be blamed entirely on 
natural disasters, but rather on unchecked corporate behavior, Public 
Citizen will tell a Senate committee today. At a hearing before the 
Senate Committee on Commerce, Science and Transportation, Tyson 
Slocum, research director, Public Citizen's energy program, said that 
recent oil company mergers are partly responsible for gasoline price 
spikes. He listed steps the government should take to alleviate high 
gasoline prices. Slocum's testimony is available at 
http://www.citizen.org/cmep/SenateOilTestimony.

The government should restore competitive markets by enforcing 
antitrust laws that make it illegal for companies to intentionally 
withhold an energy commodity from the market for the sole purpose of 
creating a shortage and driving up prices, Slocum said. The 
government also should re-regulate energy trading exchanges, boost 
fuel economy standards and force the divestiture of assets to remedy 
the problem of too few companies controlling too much of the market.

Despite Hurricane Katrina's reported impact on gasoline prices, 
gasoline and oil prices have been creeping up for two years, in large 
part because of a wave of mergers in the oil industry. Last year, the 
top five U.S. oil refining companies controlled 56.3 percent of 
domestic oil refinery capacity. A decade ago, the 10 largest U.S. oil 
refining companies controlled 55.6 percent of refining capacity — 
which means that, due to mergers, the five largest oil refiners today 
control more capacity than the 10 largest did a decade ago. This 
consolidation makes it easier for oil companies to gouge consumers at 
the pumps. The five largest oil refiners — ConocoPhillips, Valero, 
ExxonMobil, Shell and BP — have seen profits of $228 billion since 
President Bush took office in 2001.

Despite government reports issued in 2001 and 2004 that directly link 
corporate mergers to high gasoline prices, no action has been taken 
to aid consumers who are suffering from a volatile market where 
prices spike day by day. Meanwhile, oil industry profits are at 
record highs, largely due to record refinery profit margins. While in 
1999, U.S. oil refiners earned 22.8 cents for every gallon of 
gasoline they refined, that profit margin increased 80 percent by 
2004, to 40.8 cents per gallon.

"We have every meteorologist in the country monitoring hurricanes, 
letting us know exactly when the next one is going to hit and where. 
But who is monitoring the companies that are jacking up gasoline 
prices for consumers under the guise of natural disasters?" Slocum 
said. "We need the government to protect us from dangerous weather, 
but we also need to be protected from price-gouging every day when we 
heat our homes, drive our cars or fly somewhere."

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