Since failed oil executive George W. Bush became President of the United States in late January 2001, the nation’s five largest oil refiners have together raked in an astonishing $228 billion in profits. These are, to say the least, record levels.
In 1999, the companies made around 23 cents for every gallon of gas they refined. Just five years later, they were getting nearly 41 cents per gallon. This same period saw 2,600 oil industry mergers, which led to a net loss of 920,000 barrels per day in refining capacity.
These numbers come from Public Citizen’s Energy Program research director Tyson Slocum, who testified before the U.S. Senate Commerce Committee on Sept. 21, 2005. They provide the best explanation for our monumental rise in gasoline prices.
About halfway through his testimony, Slocum quoted from a U.S. Federal Trade Commission (FTC) report on high gas prices that dated to March 2001—just two months into the George W’s first term. The report highlights a conversation between FTC investigators and unnamed oil industry executives.
“An executive of this company made clear that he would rather sell less gasoline and earn a higher margin on each gallon sold than sell more gasoline and earn a lower margin,” stated the report. “Another employee of this firm raised concerns about oversupplying the market and thereby reducing the high market prices.”
Most chilling—and depressing—of all was this line: “Firms that withheld or delayed shipping additional supply in the face of a price spike did not violate the antitrust laws.”
It doesn’t get much clearer than that. Four years before Hurricanes Katrina and Rita tore through the Gulf Coast, oil companies were shutting down refineries and holding back gasoline. In their quest for stratospheric profits, multi-national oil companies and refiners are strangling the very consumers that keep them so profitable.
In a recent interview with Maui Time (see “Government Likes High Prices,” Sept. 15, 2005), Slocum rejected the idea that gas prices would come down anytime soon.
In fact, he predicted that within a year oil will rise to $100 per barrel, putting our economy “in the tank.”
Boldly ignoring such pessimism, local Maui County officials are stepping in with their own master plans for saving our hard-working men and women from crushing prices.
On Sept. 13, 2005, County Councilman—and 2006 mayoral hopeful—Dain Kane sent out a press release proposing a novel solution to the island’s octane woes: more public transportation.
“Significantly improving the County’s transit system offers the potential for great benefits to Maui’s commuting workers and their families,” he said.
Woohoo! More busses! Kane wants more “express service,” “intermodal connections,” hours of operation and incentives for county workers to leave their cars at home, though he stopped short of calling for an electric maglev train linking the West Side, South Side and Central Maui.
While good public policy, it’s ludicrous to think the county could suddenly reverse decades of social history and convince many thousands of its auto-owning citizens to lock the garage and jump on a bus.
Six days later, Maui Mayor Alan Arakawa stepped in with a solution more fitting to a good Republican.
“What our people need is cheaper fuel, and they need relief now,” was how Arakawa splendidly identified the problem in a Sept. 19, 2005 press release. Then he said the “one way” the county could get cheaper fuel was by “declaring a [two month] tax holiday on our county gas tax.” He also openly hoped the Legislature would overturn the state’s wholesale price gasoline cap.
While attractive politically, such a “holiday” is nothing more than a gimmick, sucking away precious county revenue while totally ignoring the underlying reason as to why gas prices are so high in the first place. Ditto dumping the cap, which is actually the best hope state drivers have for moderated prices.
What politicians like Arakawa and Kane can’t do is admit that there’s nothing they can do to help their pained constituents.
Though no longer surpassing four bucks a gallon, gas prices are on their way up for the long haul. That’s how the oil industry—and Bush Administration—wants it, and neither of them will be changing any time soon. MTW