Response to senators' call for gas price investigation

The message is clear: Success is bad. How dare you succeed when so many people are struggling? How thoughtless of the oil companies that they make money when the government has a desire to not cut spending or change their taxing habits. The assault on big oil continues.

After a show trial that embarrassed the democratic leadership whose hatred for the US oil industry transcends common sense, we now have yet another investigation of Big Oil. Last week at a congressional hearing Chevron CEO John Watson wiped the floor with the Democratic leadership that led to a classic and telling exchange with Senator Jay Rockefeller. Rockefeller said that big oil was out of touch and that the American people want big oil to be part of the "shared sacrifice" to get the budget under control. John Watson shot back, "I don't think that the American people want shared sacrifice, I think they want shared prosperity". Rockefeller shot back saying, "What a lovely statement."

Do you understand how out of touch that is? We don't get to shared prosperity until we get to shared sacrifice. Well the democrats decided to strike back with a bogus investigation on price fixing by oil companies and refiners. Another shameful waste of taxpayers’ money by politicians that are out of touch and show not only that they have no idea how the oil industry works, but how the economy works or any idea how to get the US economy back to prosperity.

The letter was sent to the Federal Trade Commission by Senator Claire McCaskill and signed by Senate Majority Leader Harry Reid Senator, Charles E. Schumer Senator Patty Murray and Senator Dick Durbin. The letter started with a warm, "Dear Chairman Leibowitz, We write today to request the Commission begin an investigation into potential price fixing of gasoline by U.S. refiners. Recent reports have indicated that U.S. refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line."

The first line is downright misleading. The reason that refiners have cut down on supply is because of federally mandated switch to the summer blends of gasoline. This happens every year and perhaps Senator McCaskill is not aware of this regulation. In fact if she wants she can go to the 25th Federal Trade Commission investigation into price fixing in 2006. In that report the FTC said that there was absolutely no evidence to suggest that refiners manipulated prices through any means, including running their refineries below full productive capacity to restrict supply, altering their refinery output to produce less gasoline, or diverting gasoline from markets in the United States to less lucrative foreign markets. The evidence indicated that these firms produced as much gasoline as they economically could, using computer models to determine their most profitable slate of products.

The letter goes on to say, "If true, this behavior is a direct affront to the American people who are still struggling with the economic downturn." Well it is not. Senator McCaskill then pretends to act like she has an idea how prices work by saying, "The rise in the price of oil is certainly a driving factor behind the recent rise in gasoline prices, but concerns have been raised that while gasoline use is declining, U.S. gasoline inventories remain below average and refining margins continue to rise. According to information posted by the Energy Information Administration U.S. refiners are using only 81.7 percent of their capacity, a decline of 7 percent from the same time last year. Moreover, since the beginning of 2011 U.S. refiners have seen over a ninety percent increase in their refining margins. While some have argued that this increase is due to potential impacts from recent flooding along the Mississippi River, this cannot justify the steady increases in their margins since January of this year."

Can't justify their margin increases? Does Senator Mc Caskill realize that refiners lost money in the fourth quarter of last year? The sharp rise in margins came from nothing. Does she want refiners to lose money? The other point is that refiners produced a record amount of gasoline. Refiners are more efficient and produce more gas out of the same barrel. That is good for the consumer and the environment. Would she like refiners to be less efficient to make her feel better?

Page 1 of 2 >>
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome