Gasoline prices are spiking near record highs, but pinning the blame on oil companies is going to be tough, experts say.
"Illegal?
Absolutely not. Unethical? No. Basically what they are doing is seeing
what the market will bear," said Anthony Sabino, a professor of law and
business at St. John's University in New York City. "The only thing
that is going to change this is for the American public to say enough
is enough."
Yet some consumers and politicians say rising prices reflect reprehensible conduct by the oil industry.
Rex
Wilmouth, director of the Colorado Public Interest Research Group, said
he doesn't believe big oil companies are acting illegally, but
consolidation over the past decade allows them to control supply and
prices.
Ten
years ago, he said, the biggest oil companies controlled 34 percent of
domestic crude-oil production, 33 percent of domestic refining capacity
and 27 percent of retail gas sales. Today, Exxon Mobil, Chevron,
ConocoPhillips, BP and Royal Dutch Shell control half of the domestic
oil production, half of the domestic refining and 62 percent of the
retail gas market.
"By holding back supply, they can control what the price of gasoline is going to be," he said.
On
Wednesday, the U.S. Senate said it will seek the tax returns from the
15 largest U.S. oil and gas companies to make sure they are paying what
they really owe on their recent record profits.
The
move comes as big oil companies this week again report sky-high
profits. ConocoPhillips on Wednesday said net income jumped 13 percent
to $3.29 billion, its best first-quarter performance since the
companies combined in 2002. ExxonMobil is expected to report earnings
today of $9.1 billion, up 15.7 percent.
Gasoline
prices in Colorado hit an average of $2.84 a gallon Wednesday for
unleaded regular. That's up 35 cents during the past month. The average
price nationally is $2.92 a gallon, but some cities have seen prices
over $3 a gallon or experienced spot shortages.
"It
sucks, but I've gotta have it," said Tammy Ransom of Denver as she put
$15 worth of regular unleaded in her Dodge Neon at a gas station at
East Colfax Avenue and Colorado Boulevard. "I wish they would lower it
by 2 cents, 5 cents - even a penny would help."
President
Bush this week directed the Justice Department to join an existing
Federal Trade Commission investigation into possible gasoline price
manipulation. Justice sent letters to each state attorney general
asking them to "enforce vigorously the laws of your state against any
anti-competitive, anti-consumer conduct in the petroleum industry."
In
Colorado, the legislature has passed an anti-gouging bill and sent it
to Gov. Bill Owens. The measure makes it illegal for retailers to raise
prices more than 10 percent above their costs following emergencies.
Other
states such as New York and New Jersey have similar laws and used them
to prosecute retailers after Hurricane Katrina last fall.
"We will seriously scrutinize any complaint of illegality," said Colorado Attorney General John Suthers.
But
Suthers said he doesn't have enough money to send investigators into
the field to monitor gas-station records, like New York and New Jersey
did after Katrina.
After
Hurricane Katrina, Suthers' office got 30 to 40 complaints about high
gas prices, but no action was taken, said Kristen Hubbell, Suthers'
communications director.
"There was nothing that had evidence that retailers were fixing their prices," she said.
Jason
Schenker, energy economist for Wachovia Corp., said strong worldwide
demand for oil and tight supplies have pushed oil prices above $70 a
barrel. Among the reasons for rising gasoline prices are the coming
summer driving season and increases in the cost of ethanol, a
clean-burning gasoline additive, he said.
"You
can't really blame the oil companies because they own a commodity that
has gone up in value," Schenker said. "Unless you want to nationalize
our energy ... when our economy grows, the price of gasoline goes up."
Analysts
say prices are rising primarily because of increases in refiners' gross
profit margins and crude-oil production margins. Retail gasoline
margins remain a bit below average.
In
Congress, Pennsylvania Sen. Arlen Specter has introduced a bill to
improve competition in the oil and gas industry and strengthen
antitrust enforcement.
"With
fewer players in the industry, anti-competitive acts, including the
withholding of supply and information sharing, become easier," Specter
said as part of the congressional record. "The bill would prohibit oil
and gas companies from diverting, exporting, or refusing to sell
existing supplies with the specific intention of raising prices."
