Public Citizen Calls on Congress to Curb Energy Companies’ Price-Gouging
June 7, 2006
Public Citizen Calls on Congress to Curb Energy Companies’ Price-Gouging
Tyson Slocum, Director of Public Citizen’s Energy Program, Testifies Today Before House Subcommittee
WASHINGTON, D.C. – High gasoline prices cannot be blamed entirely on hurricanes, but rather on the lack of government oversight of oil companies’ price-gouging, Public Citizen told lawmakers today before the House Committee on Government Reform Subcommittee on Energy and Resources. The national consumer group called on Congress to implement a windfall profits tax and enact strong fuel economy standards to save billions of gallons of oil. To read Public Citizen’s testimony, click here.
Since the 1990s, more than 2,600 oil company mergers and acquisitions have been approved in the U.S. petroleum industry, resulting in just a few companies controlling a significant amount of America’s gasoline, squelching competition and causing consumers to pay more at the pump, Tyson Slocum, director of Public Citizen’s energy program, told lawmakers. In addition, an increasing share of energy trading has been moving from regulated markets into unregulated exchanges, allowing companies and hedge funds to escape federal oversight and more easily manipulate the energy markets.
In 1993, the five largest U.S. oil refining companies controlled 34.5 percent of domestic oil refinery capacity while the top 10 companies controlled 55.6 percent. By 2004, the top five companies – ConocoPhillips, Valero, ExxonMobil, Shell and BP – controlled 56.3 percent, and the top 10 refiners controlled 83 percent. As a result of all the recent mergers, the largest five oil refiners today control more capacity than the largest 10 did a decade ago.
“In most industries, when the main component (crude oil) of a product skyrockets in price, those higher costs eat into profit margins,” Slocum said. “But not in the oil industry, because ExxonMobil and the other major oil companies operate as a type of monopoly, with massive oil production, refining and retail marketing operations.”
Slocum also questioned oil companies’ excuse that the weather is to blame for high gas prices. Oil and gasoline prices were rising long before Hurricane Katrina, enabling the oil to rake in record-breaking profits. (The six largest oil refining companies operating in America – ExxonMobil, ConocoPhillips, ChevronTexaco, Valero, Shell and BP – have recorded $350 billion in profits since 2001.) To protect consumers from future pricing abuse, Congress should:
- Implement a windfall profits tax to finance clean alternative energy, energy efficiency, mass transit and rebates targeted to moderate- and low-income consumers;
- Strengthen anti-trust laws by empowering the Federal Trade Commission to crack down on unilateral withholding and other anti-competitive actions by oil companies;
- Establish a Strategic Refining Reserve (financed by a windfall profits tax) to complement the Strategic Petroleum Reserve;
- Re-regulate energy trading exchanges to restore transparency; and
- Improve fuel economy standards to 40 mpg for passenger vehicles to reduce gasoline demand.
“Improving fuel economy standards for passenger vehicles from 27.5 to 40 mpg, and for light trucks (including SUVs and vans) from 22.2 to 27.5 mpg by 2015 would reduce American gasoline consumption by one-third,” Slocum said. “The National Highway Traffic Safety Administration isn’t doing enough under the Energy Policy Act to enact the maximum feasible fuel economy increase.”
For more information about oil industry mega-mergers and anti-consumer pricing policies, click here.
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