by caseydog » Wed May 23, 2007 9:52 am
This just in...
Pricey gasoline costs U.S. consumers extra $20 Billion
By Tom Doggett, Tue May 22, 4:59 PM ET
The jump in U.S. gasoline prices this year has so far drained consumers of an extra $20 billion, or about $146 for each passenger car in the country, the Government Accountability Office told Congress on Tuesday.
The national price for regular unleaded gasoline hit a record $3.22 a gallon this week, and is up $1.05 since the beginning of February, according to the Energy Department.
The added expense is taking money away from consumers to spend on other goods and services.
"Spending billions more on gasoline constrains consumers' budgets, leaving less money available for other purchases," GAO's Thomas McCool said in written testimony to a House Oversight and Investigations Subcommittee hearing on the cause of record prices.
Like many other energy experts, McCool said the GAO has found that current high pump costs are the result of a large amount of oil refining capacity being offline, strong gasoline demand and lower fuel inventories.
Many lawmakers blame the lack of competition in the oil industry from mega oil company mergers for the run-up in gasoline prices.
McCool said company mergers in the 1990s caused wholesale gasoline prices to rise during that period, but the agency has not performed modeling on mergers that occurred since 2000 and therefore could not say what the effect has been on current fuel prices.
However, he said, "These mergers would further increase market concentration nationwide since there are now fewer oil companies."
Officials from oil giants Exxon Mobil, Chevron and Shell Oil, along with major oil refiner Valero Energy Corp., were asked to testify at the hearing but declined to appear.
Federal Trade Commission member William Kovacic said his agency was closely monitoring the U.S. gasoline market for any unusual moves in prices.
"Because gasoline consumers typically do not reduce their purchases substantially in response to price increases, they are vulnerable to substantial price increases," he said.
Speaking to reporters before the hearing, he declined to comment on whether the FTC has found any evidence in the current price rise of oil companies overcharging consumers.
However, he said in his written testimony that the FTC was investigating questionable pricing and supply patterns for gasoline and diesel fuel in the Pacific Northwest.
Kovacic said the "lion's share" of the increase in pump prices nationwide appears to be attributable to refinery outages, higher gasoline use and lower fuel imports.
He said the FTC's experience from past investigations and from its current monitoring program shows that unusual movements in gasoline prices "typically have a business-related cause," such as changes in crude oil costs, refinery problems or pipeline disruptions.
Oil companies have pointed out that over 30 prior government investigations into alleged gasoline profiteering has proven the industry did nothing illegal.
Rep. Bart Stupak (news, bio, voting record), the chairman of the subcommittee, said the FTC needs more authority to punish oil companies that gouge drivers at the pump.
A bill he has introduced that would give the agency that authority, which has support from over 120 lawmakers, is scheduled to be voted on Wednesday by the House of Representatives.
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