Viewpoint: Ready for more oil crises?
By Joe Baker
Ready for more oil crises?
By Joe Baker
Whatever happened to that big energy crisis? Remember a few weeks ago when we were being told there was a mammoth shortage of gasoline? It was going to cost $3 a gallon by midsummer. Now, were paying about half that.
How can a crisis be that short-lived? If you recall, we had some price hikes last year in the Midwest. Everything was blamed on OPEC, the oil-producing nations of the Mideast. That was in the spring and summer of 2000.
A non-profit group, the Foundation for Taxpayer and Consumer Rights, commissioned a study of the problem by Tim Hamilton, an oil industry expert with 25 years experience.
That study perhaps sheds some light on this years crisis. One of the things it revealed was that OPEC had little to do with gasoline price increases.
Here are some of the other findings: Just before prices leaped upward, hundreds of millions of gallons of gasoline were shipped by Midwest refiners to other parts of the country. Large amounts went to foreign destinations.
The study said these inventory manipulations created the shortages which led to the price increases.
Despite producers assurances to the Environmental Protection Agency that inventories were adequate, the oil companies drew them down to critically-low levels and did not replace them.
In a 90-day period in Illinois alone, some $374.4 million was artificially added to pump prices last year. Production cutbacks by OPEC and new, greener gas reformulation had no significant effect on prices.
Hamilton commented: We must close the loopholes in anti-trust laws that have allowed a small group of refiners to manipulate inventories and artificially drive up the price of gasoline. When sorting out policy questions about the high price of gasoline or of heating oil, there must be a new focus on the role exports play in price spikes and the creation of artificial shortages.
Jamie Court is executive director of the taxpayers foundation. He called for a new standard for cleaner fuel. This study shows that oil refiners abused the publics trust
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Ready for more oil crises?
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and used the introduction of greener gas as an excuse to raise prices and profits while transferring gasoline to other states and nations in order to bilk motorists, Court said.
If the nation had one standard for cleaner fuel instead of many, no group of regional refiners would be able to manipulate supply because they would face increased competition from refineries in other areas. This study confirms that gasoline exports must be regulated if artificial shortages are to be prevented in the future, Court said.
A search of customs records showed more than 280 million gallons of gasoline were loaded on ships by Midwest oil companies and sent to places like Mexico, the Philippines and Venezuela in the first three months of 2000. Another 375 million gallons were moved to other parts of the country. The previous year, direct exports from the Midwest were boosted over the like period when there was no shortage.
Hamilton and the taxpayer foundation urge a bipartisan effort to set a single national standard for gasoline formulations to prevent inventory manipulation to trigger price hikes. They also recommend closing the loopholes in antitrust laws and commodity trading laws to permit prosecution of individuals and companies involved in creating price increases.
Finally, they call for steps to control the flow of crude and refined petroleum exports to make sure the multinational oil companies do not abuse the interests of this country and its citizens.
So far, weve seen none of these corrective measures advanced and, with an oil-soaked administration in power, it is unlikely that anything much will happen over the next four years.
That leaves the rest of us with little to do but tough it out. It might be of some small help if we bombarded our congressmen with demands for a clamp down on oil company exploitation.
Keep watching our website for current gas prices. Shop and compare. Buy the low price.
But dont ask Bush or Cheney for relief.