Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: crdesign who wrote (27240)	9/9/2003 11:16:05 AM
From: jlallen	Read Replies (2) \| Respond to of 89467

For what? Increased security....

To: crdesign who wrote (27240)	9/9/2003 11:57:22 AM
From: Karen Lawrence	Respond to of 89467

Attorney general's report rips oil refiners Gasoline prices raise questions of gouging (Even Bill O'Reilly is calling it price gouging) Jenny Strasburg, Chronicle Staff Writer Tuesday, September 9, 2003 California Attorney General Bill Lockyer blasted oil companies Monday for charging the state's motorists "exorbitant gas prices," releasing a report showing refiners had increased their gasoline markup by 152 percent during the first three months of the year. Gasoline markups -- which include refinery costs and profit -- jumped from 27.6 cents per gallon of regular unleaded gasoline to 69.6 cents at the end of March, Lockyer said. That was more than twice the national average markup, or margin, of 30.7 cents at the end of March. "These numbers raise legitimate questions about whether this state's drivers and businesses are getting gouged," Lockyer said in a statement, in which he also cited "deep-seated market flaws that make California especially vulnerable to price spikes." Those increased refiner margins took their toll at the pump, Lockyer said. Figures released by the attorney general showed a 57-cent-per-gallon-spike in the price of unleaded gas in California during the first three months of 2003. That hike pushed unleaded in some areas of the state to a then-record $2.15 per gallon, up from $1.58, the report said. The attorney general's report attributed an estimated 6 cents of that increase to the state's shift to ethanol-based gas. However, much of the remaining increase represented profit for oil companies, Lockyer stated. OIL INDUSTRY RESPONDS The report was immediately criticized by the oil industry. The Western States Petroleum Association said the state's gas-pump prices fairly represented industry costs, as has been shown by recent government investigations into West Coast gasoline-price volatility. An investigation ordered by Gov. Gray Davis in March into escalating gasoline, diesel and natural-gas prices found no evidence of illegal manipulation. Instead, the probe -- by the California Energy Commission and the state Public Utilities Commission -- attributed higher energy costs primarily to market forces. The energy commission also cited peculiarities in California's gasoline market, including refinery-maintenance schedules and requirements for fuel additives. MARKETS DICTATE PRICES "Margins do not equal profits," said Jeff Wilson, a spokesman for the association. "The attorney general's conclusion contradicts those of previous investigations this year as to the causes of market volatility during the period in question. The California Energy Commission reported that causes were strictly market-based, as did the U.S. Energy Information Administration, which also concluded there was no gouging." Oil-industry profit margins -- taking into account fluctuating market conditions -- lag behind those of other industries, Wilson said. Refiners have blamed higher prices on, among other causes, political unrest in Venezuela, Nigeria and Iraq as well as stepped-up demands for winter fuel oil in the Eastern United States. Charles Langley of the Utility Consumers Action Network praised Lockyer's report but said its findings were most likely conservative. He said the price burden shouldered by California consumers was probably greater than the attorney general's data suggested. "No question about it, we are getting gouged, and we are getting gouged very deeply," Langley said. "The problem is, what do we do about it? The oil industry can point to a lot of reasons as to why our prices are high . . . but when you start looking at 70 cents a gallon pure profit when oil prices have barely fluctuated, it's very difficult to argue that you're not gouging." The margins cited in the attorney general's report included oil company costs and profits. However, since refiners' costs increased minimally, the remainder of the increase "is almost solely profit," the report said. Criticizing that assessment, independent energy economist Phil Verleger Jr. said that California motorists paid higher fuel prices mostly because of market strains. 'SUPPLY AND DEMAND' "The prices we saw were set by supply and demand," Verleger said. "There's no gouging. Supply was reduced," in part by government regulations that have restrained the ability of merged oil companies to operate efficiently. A task force that Lockyer appointed to look into earlier gas-price increases has found no evidence of unlawful market conduct by oil companies, the attorney general said Monday. He called for state lawmakers to revisit the gasoline-price task force's May 2000 recommendations -- most of which have gone unheeded, according to Lockyer -- in order to protect California from price surges that commonly are far worse than those experienced in other states. The attorney general called for consideration of a strategic fuel reserve for California, steps to encourage more competitive pricing and improved access to refined-gas imports. Lockyer also said that the state should pursue "all reasonable means" to increase fuel efficiency and the use of alternatively powered vehicles.