Pump Price up a Nickel in a Week, Boosting Refinery Profits Even as Economists See Recession Looming
Santa Monica, CA -- A weekly national increase of more than a nickel a gallon for regular gasoline has motorists paying a "speculative bonus" to hedge fund traders and others who have kept the price of crude oil near $100 a barrel, said the Foundation for Taxpayer and Consumer Rights (FTCR). With pump prices up nationally to $3.109 from $3.054 over the past week, at a time of year when prices are historically at their lowest, spring is all but certain to bring new record prices.
"Today's rising energy prices as the U.S. slides into recession are not a slow-moving disaster, they're a dive out the high-rise window," said Judy Dugan, research director of FTCR and its OilWatchdog.org project. "Government can't sit idle until the splatter hits the sidewalk."
FTCR said Congress should call immediate hearings on energy price manipulation, questioning energy traders from hedge funds to oil companies themselves. FTCR has called for federal oversight of unregulated electronic energy trading markets, and for more cost transparency and regulation of refineries.
Oil companies that reaped the benefit of crude oil at $90-plus per barrel in the last quarter of 2007 are now pushing to match that windfall when they make the crude oil into gasoline, said FTCR. Last May, as motorists nationally paid a record $3.227 a gallon at the pump, and $3.49 in California, oil companies made up to $1 a gallon just on refining. Similar refining profits this spring would spike gasoline to well over $4.00 in California, and near $4.00 nationally.
Gasoline is now nearly a dime more than it was a month ago and up 69 cents a gallon from the same time last year.
"While the speculation-driven price of oil could be blamed for $3.00 gasoline in January, $4.00 gasoline in May will again be laid at the door of oil companies and refiners," said Dugan. "Oil companies refuse to expand or even modernize their refineries, then every spring they blame their self-caused shortage of gasoline for price spikes. The economic effect of a price spike from $3.00 to $4.00 would be far more serious than a spike from $1.99 to $2.50, which seemed outlandish only a few years ago."
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