Big Oil says not to blame for high gasoline prices
WASHINGTON (Reuters) - Oil companies are not overcharging motorists for gasoline, an industry group told Congress on Wednesday, but U.S. lawmakers were skeptical that Big Oil was working hard enough to provide the fuel supplies needed to keep pump prices in check.
Consumers are paying record gasoline prices, currently at a national average of $3.10 a gallon, because of tight supplies and strong motor fuel demand.
The American Petroleum Institute told lawmakers its members were not to blame for high pump costs.
"We recognize that consumers are frustrated with today's higher prices," API chief economist John Felmy told lawmakers on a House panel investigating the price run-ups.
"The contention that higher prices are driven by market failure or market manipulation, including the holding back of supplies, is not credible," Felmy said.
Many U.S. lawmakers and consumer groups are accusing oil companies of keeping some their refineries temporarily offline in order to limit gasoline supplies and push up pump prices.
"Oil companies today are enjoying record profits, and while they could use those profits to invest in more production capacity, instead they use the money to buy back shares in the market," said Rep. John Conyers, who chairs the antitrust panel.
Conyers pointed out that refiners' profits last year jumped 39 percent to $24 billion.
Oil companies earned about $200 billion in excess profits from 2003 through 2006, according to the Consumer Federation of America.
About 800,000 barrels a day in U.S. oil refining capacity are currently shut, resulting in the loss of about 400,000 barrels a day in gasoline production, according to government energy experts. Normally less than 100,000 barrels a day in oil refining capacity is offline at this time of year.
"Shrinking refinery capacity and a reluctance to invest in new infrastructure have significantly restrained gasoline supplies, driving refinery profits to record highs," said Rep. Bart Stupak.
Stupak said refiners are earning 70 cents in profits on every $3 gallon of gasoline sold, when energy experts argue about 20 cents is a more reasonable profit margin.
Stupak has introduced legislation, supported by many lawmakers, to give the Federal Trade Commission more authority to go after companies that overcharge consumers for gasoline.
Felmy acknowledged that many of the nation's aging refineries are temporarily down for planned routine maintenance or had unexpected operating problems that have prevented them from making gasoline.
In a telephone call with reporters before the hearing, Felmy said oil companies were not able to coordinate their refinery maintenance and outages to make sure enough facilities were always operating because that would violate federal antitrust laws.
"But I am sure that they are looking to, wherever they can, return to operations as quickly and safely as they can. I have no doubt that they will be doing that," he said.
Felmy higher crude oil prices, not refinery problems, is the main factor behind expensive gasoline. "More than half the cost of gasoline is attributable to the cost of crude oil."
Felmy also said U.S. gasoline imports have been lower because some European refineries have shut for spring maintenance and there was a recent French port workers' strike that cut into available supplies.
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.