Agence France Presse
WASHINGTON, D.C. –Â Oil companies are again the target of US public and political anger over their record profits as prices at the gasoline pump go sky-high.
The political pressure has got so hot in the nation’s capital, that US President George W. Bush on Tuesday ordered a probe into the potential manipulation of gasoline prices at fuel stations.
Meanwhile, opposition Democrats are seeking to capitalize on the price spikes ahead of November congressional elections.
“There’s nothing wrong with corporate profits and I’m all for Americans having retirement security, but does anyone think it is fair to have consumers pay 100 dollars a week to fill their fuel tanks, while the Big Energy bosses fill their bank tanks with hundreds of millions of dollars?” Senate Democratic minority leader Harry Reid asked Monday.
He was alluding to a 400-million-dollar compensation package pocketed by former ExxonMobil CEO Lee Raymond when he retired.
That was a drop in the bucket compared to the 36 billion dollars in net earnings that the number one oil giant reaped in 2005.
Consumers are stunned by prices at the gasoline (petrol) pump that have topped three dollars a gallon (3.8 liters) in some US states. While those are not record highs once adjusted for inflation, many Americans are feeling the pinch.
Since he is seen as close to the oil industry — he worked in the industry as did his father — Republican President George W. Bush cannot stand idly by and let the opposition Democrats lead the attack on the issue of prices at the pump.
Aside from the gasoline pricing probe, Bush also Tuesday suspended deposits into the US strategic oil reserves.
“Taxpayers don’t need to be paying for certain of these expenses on behalf of the energy companies,” Bush said referring to what he called “unnecessary tax breaks like the writeoffs of certain geological and geophysical expenditures, or use of taxpayers’ money to subsidize energy companies research into deep water drilling.”
Oil executives were called to testify before Congress after gasoline prices soared on the heels of Hurricane Katrina last year. They blamed damage to pipelines and refining infrastructure in the region, and an imbalance in supply and demand worldwide.
Dave O’Reilly, CEO of number two US oil company Chevron, also reminded senators that public national oil and gas companies control most of global output and not private firms.
“We are dwarfed in size by national oil companies such as Saudi Aramco and Russia’s Gazprom,” he noted.
U.S. consumer groups charge that megamergers have reduced competition in the United States, making competition less of an issue.
The Foundation for Taxpayer and Consumer Rights in a recent report on California prices — among the country’s highest — said the link between crude prices and the price of gasoline at the pump was questionable.
“Oil companies are opportunistically using the rising world price for crude oil as an excuse to excessively raise gasoline prices and pump up their profits, even though the spot market price for crude has gone up far more slowly than gasoline prices,” said FTCR President Jamie Court.
“In addition, the spot price is higher than most oil companies pay, since they either harvest their own crude or pay more stable and often much lower contract prices,” Court said.
