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Thread: Congressional panel takes Big Oil to task

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    Hit By Ban Bus! AliceInWonderland's Avatar
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    Angry Congressional panel takes Big Oil to task

    Congressional panel takes Big Oil to task

    Lawmakers question why profits go up and supply goes down
    The Associated Press
    Updated: 3:37 p.m. PT May 16, 2007

    WASHINGTON - While oil companies blame soaring gasoline prices on unexpected refinery shutdowns, Congress is questioning whether industry mergers and investment decisions have erased a supply cushion.

    The House Judiciary Committee’s antitrust task force Wednesday opened the first of a number of hearings on oil industry concentration with its chairman noting that gasoline prices have soared well above $3 a gallon and asking, “How did we get into this mess?”

    “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 markets,” complained Rep. John Conyers Jr., D-Mich., the panel’s chairman.

    Exxon Mobil Corp. and Chevron Corp., the nation’s largest oil companies, earned a combined $14 billion in the first quarter. Exxon bought Mobil in 1999, while Chevron acquired Texaco in 2001.

    John Felmy, chief economist at the American Petroleum Institute, rejected suggestions that companies want to curtail production to keep prices high and said refiners have been producing record amounts of gasoline.

    “The higher prices reflect an imbalance between supply and demand” and high crude oil prices, said Felmy, whose group represents the major oil companies, including Exxon Mobil, Chevron, and ConocoPhillips. He reiterated that refinery shutdowns, a decline in gasoline imports and higher demand are at the core of the upward price spiral. There is no evidence of price manipulation, he said.

    Gasoline prices this week reached a nationwide record average of $3.10 a gallon, about 3 cents higher than after Hurricane Katrina devastated Gulf of Mexico oil supplies and shut down the Gulf’s refineries, according to the Energy Department.

    Rep. Bart Stupak, D-Mich., who has crafted a bill that would make oil and gas price gouging a federal crime, questioned why gasoline prices soared even as crude oil prices dropped.

    “In April ... crude oil was $7 a barrel cheaper than last year (but) gas prices were almost 50 cents a gallon higher,” said Stupak. “Clearly there’s more at play than simply the world crude oil market.”


    Industry experts and DOE’s Energy Information Administration have cited an unusual number of refinery outages for the tight gasoline supply, resulting in higher prices. The agency this week said that as refineries get back on line, gasoline inventories are moving higher and that prices may begin to recede.

    Consumer advocate Mark Cooper questioned at the House hearing whether the industry may be keeping supplies tight on purpose.

    “By creating a situation of extremely tight supply, the oil companies gain control over price at the wholesale level,” said Cooper, who monitors energy industries at the Consumer Federation of America. Despite huge increases in refinery profits, there have been no investments in refinery capacity, he argued.

    Felmy said that while no new refinery has been built since the 1970s, the industry has expanded existing refinery capacity at a pace equivalent to one additional new refinery a year over the last decade. Still, he said the decision to build refineries is made on whether it’s “in the interest of your shareholders given the uncertainties.”

    Conyers said one problem has been industry consolidation.

    “In 1993 the five biggest refiners in the U.S. controlled 35 percent of the market. By 2004 they controlled 56 percent,” he said, adding that in some regions a few refineries control the market.

    “With this type of market structure, each individual refinery can limit capacity and drive up prices,” said Conyers.

    Connecticut Attorney General Richard Blumenthal told the task force that “lax and lackluster” federal enforcement of antitrust laws has led to an explosion of oil industry mergers, “many of them profoundly anticompetitive and anti-consumer.”

    (Copyright 2007 by The Associated Press. All Rights Reserved.)

    © 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
    URL: Congressional panel takes Big Oil to task - Oil & Energy - MSNBC.com
    yes this needs to happen! oil companies are crooks and we need to get off of oil already! its 2007 for gawdssakes! im so ashamed at what i drive

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    Elite Member McJag's Avatar
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    I'm all for profit-but a killing is piggy.
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    Elite Member Mr. Authority's Avatar
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    I have doubts congress is going to do anything, they'll "look into it" but nothing's gonna change. even in the democratic congress there's still the lobbyists that love the oil profits. .

    I'm so sick of gas prices and all this shit that I refuse to drive now, carpooling is the way to go for now.

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    Hit By Ban Bus! AliceInWonderland's Avatar
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    ^ yeah you're right; this has happened before and nothing happened. Since gas prices have been the way they've been for the last year or so; oil companies have been making the biggest profits ever for any company in history not just breaking their own records. its disgusting.

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    Elite Member Grimmlok's Avatar
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    Unless they get the big oil honchos in front of a committee and SWEAR them in, nothing will ever change.

    Gov is owned by big oil, thems the facts.
    I am from the American CIA and I have a radio in my head. I am going to kill you.

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    youre right and we individually should get off oil, thats why im so ashamed to be in the car i am.

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    Elite Member greysfang's Avatar
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    They pull this congressional hearing shit every damn summer to trick the public into thinking our reps are trying to do something and NOTHING ever changes. The fact of the matter is, Bush, Cheny and Condy (just at the top of a very long list) are all making HUGE personal profits from big oil.
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    ^ yes thats right too, my father for one is kicking himself for not investing in oil when Bushie took office, it was so obvious I guess what would happen. 9/11 was just a distraction.

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    Elite Member nwgirl's Avatar
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    I for one believe that the oil companies are totally on the up and up and that they have the consumer and economy in mind for every decision they make. Further, when they raise their gas prices every second and close refineries during the peak driving seasons, I believe this is in our best interest and is not planned in any way to line their pockets.

    Now if you'll please excuse me, I have to go and wait for my weekly pickup by the aliens. They're gonna probe my butt this week!

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