No Collusion on Gas prices

[Gravitymaster 0]

Report on Gas Prices Finds No Collusion

By STEPHEN LABATON
Published: May 22, 2006
WASHINGTON, May 22 — A federal investigation concluded today that rapidly rising gasoline prices over the last year have not been the result of unlawful price manipulation by the industry.

In a report that Congress ordered last summer after price spikes following the hurricanes that struck the Gulf Coast, the Federal Trade Commission said that the sharp jump at the pump was attributable to market forces — namely big drops in supply and production as well as runs on inventories after major damage to refineries, ports and pipelines. The commission found no evidence of price collusion, or improper reductions of inventory or supplies to increase company profits.

"The evidence collected in this investigation indicated that firms behaved competitively," the commission said.

Unable to find an industry villain in the sharp increase in prices, the report is certain to add political pressure on Congress to take steps to lower prices or reduce the record earnings of some oil companies. While the agency had been expected to reach the conclusions that it formally announced today, senior commission officials said they expected the agency would come under criticism when the five commissioners appear before the Senate Commerce Committee on Tuesday.

The commission said it found 15 examples of pricing by refineries, wholesalers or retailers that technically fit the definition of "price gouging." But it said that in virtually all of those instances, there probably was not unlawful gouging because of regional or local trends that justified the higher prices.

"Some price gouging by individual retailers did occur to a limited extent," the report said. "Local or regional market trends, however, seemed to explain the price increases in all but one case. Exceptionally high prices on the part of individual retailers generally were very short-lived." The report did not identify the company involved in the one case.

The report, which in recent weeks has been cited by President Bush in response to questions about high gas prices, had been widely expected to exonerate oil producers, in part because it is difficult to define market manipulation and price gouging. One commissioner, Jon Leibowitz, observed in a concurring opinion that price gouging "is the obscenity of antitrust law: difficult to define in theory but easily recognized at the pump."

Moreover, the industry suffered substantial damage last summer that proved to be highly disruptive, and previous reports by the agency over the years about pricing habits of the oil industry had reached similar conclusions.

The hurricanes knocked out about a third of the nation's crude oil production, and in the days following Katrina alone, gas prices jumped an average of about 50 cents a gallon in some cities. Just as the prices began to drop, a second hurricane, Rita, caused further significant damage to the region, and in its aftermath, prices jump by another 35 cents a gallon.

"In light of the amount of crude oil production and refining capacity knocked out by Katrina and Rita, the sizes of the post-hurricane price increases were approximately what would be predicted by the standard supply and demand paradigm that presumes a market is performing competitively," the report said. "Evidence gathered during our investigation indicated that the conduct of firms in response to the supply shocks caused by the hurricanes was consistent with competition."

Still, as lawmakers come under increasing pressure from voters outraged about the high price of gas, senior officials at the commission said in recent days that they were bracing for criticism. Congress has been considering legislation to ease the burden on consumers or lower the profits on the oil industry. Last week, the House of Representatives approved a measure to renegotiate more than 1,000 leases for drilling in the Gulf of Mexico. The lawmakers say they will consider energy legislation after they return from the Memorial Day recess in June.

Gas prices have declined slightly, to an average of $2.93, and could continue to drop in coming weeks, said Trilby Lundberg, an analyst who conducts a survey of stations around the nation.

_____________________________________________________________________________

How can this be? Weren't we told by many on this site that Bush and his Oil buddies were manipulating the price? Oh, wait, I know....they manipulated this investigation. 26%er, gotta love'em.

[nanook 1]

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Unable to find an industry villain in the sharp increase in prices, the report is certain to add political pressure on Congress to take steps to lower prices or reduce the record earnings of some oil companies.

Uh Oh. . .hope we don't see a price ceiling in the future.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[wmw999 2,588]

I would be far more in favor of the oil companies investing their windfall profits into alternative energy research. They have a vested interest in staying in the energy-provision business.

Wendy W.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[Gawain 0]

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Uh Oh. . .hope we don't see a price ceiling in the future.

There won't be. Hawaii tried it and it failed. What happened instead was it kept retail prices at their "highest" limit, and in some cases, suppliers didn't sell the product at all.

"Market response" works both ways.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[kallend 2,148]

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How can this be? Weren't we told by many on this site that Bush and his Oil buddies were manipulating the price? Oh, wait, I know....they manipulated this investigation. 26%er, gotta love'em.

Logical fallacy, non sequitur.

...

The only sure way to survive a canopy collision is not to have one.

[bch7773 0]

there is a problem with the high prices. The gas companies aren't building new refineries to keep up with demand. Instead they are happy to wallow in record profits.

I think there should be some law that mandates a percentage of profits either into alternative energy research or new refineries or facilities that will add to production capibility

MB 3528, RB 1182

[idrankwhat 0]

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_____________________________________________________________________________

How can this be? Weren't we told by many on this site that Bush and his Oil buddies were manipulating the price? Oh, wait, I know....they manipulated this investigation. 26%er, gotta love'em.

Samuel W. Bodman
During his second week in office, the President put together a task force to address America’s energy challenges. The task force sent back more than 100 recommendations as part of a new National Energy Policy. And over the past four years, we have implemented 95 percent of those recommendations.
http://www.whitehouse.gov/ask/20050309.html

I try not to listen to too much of what the President says. He has a tendency to mislead so I prefer to look at the results. Before they implemented 95% of the energy industry's recommendations it cost me half as much fill up. Exxon/Mobile et. al. is reaping profits higher than any company in history. But why would you expect it to be any different considering that oil execs are holding our nations highest offices. They've even got at least one Supreme Court judge in their pocket. Pardon me while I remain cynical of the results finding no wrong doing. It's not unlike Halliburton's gas contract with Iran in spite of sanctions. Perfectly legal because it was handled through a Cayman fax machine. Wrong, but legal.
Quack Quack.

[idrankwhat 0]

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there is a problem with the high prices. The gas companies aren't building new refineries to keep up with demand. Instead they are happy to wallow in record profits.

This is a few year's old but I doubt that the sentiment behind the memo's has changed. It's about large corporations trying to maximize their profits.


Published on Friday, June 15, 2001 by the Associated Press
Leaked Oil Industry Memo Suggests Bid to Curb Refinery Output
by H. Josef Hebert

Even as the Bush administration cites a lack of refineries as a cause of energy shortages, oil industry documents show that five years ago companies were looking for ways to cut refinery output to raise profits.

The internal memos involving several major oil companies were released Thursday by Sen. Ron Wyden, D-Ore., whose office obtained them from a whistleblower. He said the materials did not necessarily reflect any illegal activities but said some of them "sure look very anticompetitive."

In response, Red Cavaney, the president of an industry trade group, said: "This finger pointing six years into the past serves no useful purpose."

Wyden was turning the material over to the Governmental Affairs Committee, which plans hearings on oil industry practices and energy prices.

Tight gasoline supplies have been cited repeatedly by the industry and the White House as a primary reason for soaring gasoline prices this year.

While pump prices have eased recently, the cost of gasoline jumped an average of 31 cents a gallon nationwide during the seven weeks ending in mid-May, according to government figures presented at a House hearing Thursday.

Because it takes about four years to build a large refinery, planning for a new plant would have had to begin by the mid-1990s, energy experts say. There has not been a new refinery build in the United States in 25 years; in the meantime, dozens of small ones have closed.

The documents obtained by Wyden's office suggest that in the mid-1990s oil companies had no interest in building refineries because of low profit margins. In fact, companies were discussing the need to curtail refinery output in order to make more money, the documents suggest.

"If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery margins (profits)," said an internal Chevron document in November 1995, citing views presented by participants at an American Petroleum Institute conference.

A year later, an official at Texaco, in a memo marked "highly confidential," called concerns about too much refinery capacity "the most critical factor" facing the refinery industry. Excess capacity is producing "very poor refining financial results," the memo said.

Wyden said the documents "raise significant questions about whether America's oil companies tried to pull off a financial triple play – boosting profits by reducing refinery capacity, tagging consumers with higher pump prices and then arguing for environmental rollbacks."

The institute produced statistics showing refinery capacity has increased since 1996 as refineries became more efficient and some expanded. The figures also showed capacity increasing slower than demand.

Cavaney, the institute's president, said the industry's reluctance to invest in new refinery capacity when profit margins are low and supplies are adequate – as was the case in the mid-1990s – was "a normal response in a commodity market."

Wyden singled out a 1996 memo from Mobil Corp., which has since merged with Exxon, that suggests that Mobil was ready for a "full court press" to make sure an independent California refinery, which had closed in 1995, would not reopen.

At the time Mobil was concerned that if the refinery, owned by the Powerine Oil Co., resumed production it might force down the price of a special, cleaner burning gasoline by as much as 3 cents.

"Needless to say, we would all like to see Powerine stay down," the memo said. "Full court press is warranted in this case." The refinery remained closed.

Texaco spokeswoman Keelin Molloi said Wyden's allegations "divert attention away from legitimate policy questions" about energy needs.

As for the 1995 Texaco memo, she said: "Within any company, discussions about the margins and capacity are conducted in a normal course of business and in no way constitutes inappropriate or illegal behavior."

Chevron spokesman Fred Gorell said the company "flatly denies any improper conduct involving refinery production levels or gasoline pricing."

Attempts to reach ExxonMobil were unsuccessful.

The need for more refinery capacity has been the focus of President Bush's energy plan. Vice President Dick Cheney has blamed gasoline prices increases on tight supplies caused to a large part, he contends, by the fact that the last new U.S. refinery was built in 1976.

In fact, 24 refineries – many of them small independents – have shut down since 1995, according to the Energy Department. That has accounted for the loss of 831,000 barrels a day of refining capacity. Individual refinery expansions at the same time have added 1 to 2 percent of capacity annually.

© Copyright 2001 The Associated Press

[Gravitymaster 0]

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_____________________________________________________________________________

How can this be? Weren't we told by many on this site that Bush and his Oil buddies were manipulating the price? Oh, wait, I know....they manipulated this investigation. 26%er, gotta love'em.

Samuel W. Bodman
During his second week in office, the President put together a task force to address America’s energy challenges. The task force sent back more than 100 recommendations as part of a new National Energy Policy. And over the past four years, we have implemented 95 percent of those recommendations.
http://www.whitehouse.gov/ask/20050309.html

I try not to listen to too much of what the President says. He has a tendency to mislead so I prefer to look at the results. Before they implemented 95% of the energy industry's recommendations it cost me half as much fill up. Exxon/Mobile et. al. is reaping profits higher than any company in history. But why would you expect it to be any different considering that oil execs are holding our nations highest offices. They've even got at least one Supreme Court judge in their pocket. Pardon me while I remain cynical of the results finding no wrong doing. It's not unlike Halliburton's gas contract with Iran in spite of sanctions. Perfectly legal because it was handled through a Cayman fax machine. Wrong, but legal.
Quack Quack.

Yep, I knew one of the 26%ers would claim the investigation Congress ordered by the FTC was manipulated by Bush and his oil buddies. quack, quack.

My outdoors thermometer went up and it got warmer. Do you think it's controlling the temperature? quack quack.

Only sick people take pills. If I don't take pills, I won't get sick. quack quack.

[Gravitymaster 0]

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Quote

there is a problem with the high prices. The gas companies aren't building new refineries to keep up with demand. Instead they are happy to wallow in record profits.

This is a few year's old but I doubt that the sentiment behind the memo's has changed. It's about large corporations trying to maximize their profits.


Published on Friday, June 15, 2001 by the Associated Press
Leaked Oil Industry Memo Suggests Bid to Curb Refinery Output
by H. Josef Hebert

Even as the Bush administration cites a lack of refineries as a cause of energy shortages, oil industry documents show that five years ago companies were looking for ways to cut refinery output to raise profits.

The internal memos involving several major oil companies were released Thursday by Sen. Ron Wyden, D-Ore., whose office obtained them from a whistleblower. He said the materials did not necessarily reflect any illegal activities but said some of them "sure look very anticompetitive."

In response, Red Cavaney, the president of an industry trade group, said: "This finger pointing six years into the past serves no useful purpose."

Wyden was turning the material over to the Governmental Affairs Committee, which plans hearings on oil industry practices and energy prices.

Tight gasoline supplies have been cited repeatedly by the industry and the White House as a primary reason for soaring gasoline prices this year.

While pump prices have eased recently, the cost of gasoline jumped an average of 31 cents a gallon nationwide during the seven weeks ending in mid-May, according to government figures presented at a House hearing Thursday.

Because it takes about four years to build a large refinery, planning for a new plant would have had to begin by the mid-1990s, energy experts say. There has not been a new refinery build in the United States in 25 years; in the meantime, dozens of small ones have closed.

The documents obtained by Wyden's office suggest that in the mid-1990s oil companies had no interest in building refineries because of low profit margins. In fact, companies were discussing the need to curtail refinery output in order to make more money, the documents suggest.

"If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery margins (profits)," said an internal Chevron document in November 1995, citing views presented by participants at an American Petroleum Institute conference.

A year later, an official at Texaco, in a memo marked "highly confidential," called concerns about too much refinery capacity "the most critical factor" facing the refinery industry. Excess capacity is producing "very poor refining financial results," the memo said.

Wyden said the documents "raise significant questions about whether America's oil companies tried to pull off a financial triple play – boosting profits by reducing refinery capacity, tagging consumers with higher pump prices and then arguing for environmental rollbacks."

The institute produced statistics showing refinery capacity has increased since 1996 as refineries became more efficient and some expanded. The figures also showed capacity increasing slower than demand.

Cavaney, the institute's president, said the industry's reluctance to invest in new refinery capacity when profit margins are low and supplies are adequate – as was the case in the mid-1990s – was "a normal response in a commodity market."

Wyden singled out a 1996 memo from Mobil Corp., which has since merged with Exxon, that suggests that Mobil was ready for a "full court press" to make sure an independent California refinery, which had closed in 1995, would not reopen.

At the time Mobil was concerned that if the refinery, owned by the Powerine Oil Co., resumed production it might force down the price of a special, cleaner burning gasoline by as much as 3 cents.

"Needless to say, we would all like to see Powerine stay down," the memo said. "Full court press is warranted in this case." The refinery remained closed.

Texaco spokeswoman Keelin Molloi said Wyden's allegations "divert attention away from legitimate policy questions" about energy needs.

As for the 1995 Texaco memo, she said: "Within any company, discussions about the margins and capacity are conducted in a normal course of business and in no way constitutes inappropriate or illegal behavior."

Chevron spokesman Fred Gorell said the company "flatly denies any improper conduct involving refinery production levels or gasoline pricing."

Attempts to reach ExxonMobil were unsuccessful.

The need for more refinery capacity has been the focus of President Bush's energy plan. Vice President Dick Cheney has blamed gasoline prices increases on tight supplies caused to a large part, he contends, by the fact that the last new U.S. refinery was built in 1976.

In fact, 24 refineries – many of them small independents – have shut down since 1995, according to the Energy Department. That has accounted for the loss of 831,000 barrels a day of refining capacity. Individual refinery expansions at the same time have added 1 to 2 percent of capacity annually.

© Copyright 2001 The Associated Press

How un-American for a business to take steps to maximize profits for it's share holders.

[idrankwhat 0]

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How un-American for a business to take steps to maximize profits for it's share holders.

Finally, you're starting to come around. That's what I was pointing out before. When you have an industry that pays millions and millions of dollars (oops, free speech) to put "public" servants into office, those servants also happen to have financial ties to the oil industry, both business and personal family relationships, why would I not expect those government officials to write tax codes that benefit the industry, create subsidies for them and hell, even let the industries themselves write the legislation that sets the regulations on production and pollution control?
I understand it but I don't like it. I'm a tax payer and my tax dollars are subsidizing an industry that holds control over the cost of everything in my daily life, as well as our Nation's foreign policy. Call me old fashioned but I like to be kissed when I'm fucked.

[kelpdiver 2]

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How un-American for a business to take steps to maximize profits for it's share holders.

Profits, sure. Collusion, no. Did it happen? Very hard to show, could also just be the consequence of allowing all of the mergers.

We do know that it took 4 years and Enron's bankrupcy to get the documents that proved tampering during California's power "crisis."

[nanook 1]

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"Market response" works both ways.

Yup, This is why I was a little worried. I hate the possibility of waiting in line for gas. Some people may forget Hawaii. They definitely forgot New York when some idiot here tried to pass a rent-control bill in San Diego.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[Gravitymaster 0]

Apparently you missed the sarcasm.

Can you explain how the American oil companies convinced OPEC and all the non-OPEC countries to simultaneously raise the price of a barrel of oil worldwide?

[Lucky... 0]

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_____________________________________________________________________________

How can this be? Weren't we told by many on this site that Bush and his Oil buddies were manipulating the price? Oh, wait, I know....they manipulated this investigation. 26%er, gotta love'em.

Samuel W. Bodman
During his second week in office, the President put together a task force to address America’s energy challenges. The task force sent back more than 100 recommendations as part of a new National Energy Policy. And over the past four years, we have implemented 95 percent of those recommendations.
http://www.whitehouse.gov/ask/20050309.html

I try not to listen to too much of what the President says. He has a tendency to mislead so I prefer to look at the results. Before they implemented 95% of the energy industry's recommendations it cost me half as much fill up. Exxon/Mobile et. al. is reaping profits higher than any company in history. But why would you expect it to be any different considering that oil execs are holding our nations highest offices. They've even got at least one Supreme Court judge in their pocket. Pardon me while I remain cynical of the results finding no wrong doing. It's not unlike Halliburton's gas contract with Iran in spite of sanctions. Perfectly legal because it was handled through a Cayman fax machine. Wrong, but legal.
Quack Quack.

Yep, I knew one of the 26%ers would claim the investigation Congress ordered by the FTC was manipulated by Bush and his oil buddies. quack, quack.

My outdoors thermometer went up and it got warmer. Do you think it's controlling the temperature? quack quack.

Only sick people take pills. If I don't take pills, I won't get sick. quack quack.

It's this kind of rhetoric that IS the Republican Party.

What's with the 26%ers and 74%er? Is it that you are flipping the true percentage of Bush supporters?

[Gravitymaster 0]

Quack!

[rushmc 23]

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Quack!

what?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[idrankwhat 0]

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Apparently you missed the sarcasm.

Can you explain how the American oil companies convinced OPEC and all the non-OPEC countries to simultaneously raise the price of a barrel of oil worldwide?

Yea, I missed it. Sorry.
First of all, I'll have to check but I question how "American" American oil companies are considering that most are multinational. Admittedly, the price of oil is higher world wide and I attribute a lot of that to Bush's vigorous stirring of the middle east hornet's nest. But the real price of a gallon of gas isn't pegged 1:1 to the current price of oil. Oil and gas companies deal in bulk and pay less than the going rate, (something I wish our government would do with prescription drugs). Also, someone pointed out yesterday that the oil companies say that mixing blends with ethanol etc. makes gas more expensive yet those states which don't use those blends are still paying the national average for gas. These folks will get the price that the market will bear. Except for Venezuela. Chavez seems to be the exception and I think a lot of that is just f'ing with Bush. But now that I'm thinking about it, why does Citgo gas (from Venezuelan heavy crude) still cost the same as everyone else? Who's setting the price on their gas? I may have to look into that one, even though I think I know the answer.

[Lucky... 0]

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Quack!

what?

Don't expect a lot more from him.

[Lucky... 0]

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Apparently you missed the sarcasm.

Can you explain how the American oil companies convinced OPEC and all the non-OPEC countries to simultaneously raise the price of a barrel of oil worldwide?

Yea, I missed it. Sorry.
First of all, I'll have to check but I question how "American" American oil companies are considering that most are multinational. Admittedly, the price of oil is higher world wide and I attribute a lot of that to Bush's vigorous stirring of the middle east hornet's nest. But the real price of a gallon of gas isn't pegged 1:1 to the current price of oil. Oil and gas companies deal in bulk and pay less than the going rate, (something I wish our government would do with prescription drugs). Also, someone pointed out yesterday that the oil companies say that mixing blends with ethanol etc. makes gas more expensive yet those states which don't use those blends are still paying the national average for gas. These folks will get the price that the market will bear. Except for Venezuela. Chavez seems to be the exception and I think a lot of that is just f'ing with Bush. But now that I'm thinking about it, why does Citgo gas (from Venezuelan heavy crude) still cost the same as everyone else? Who's setting the price on their gas? I may have to look into that one, even though I think I know the answer.

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the price of oil is higher world wide and I attribute a lot of that to Bush's vigorous stirring of the middle east hornet's nest

Evidence of this can be found by looking at Bush SR and Jr's war; the only times in the past 35 - 40 years that gas prices have doubled or more is during the Gulf War and now. Opec has guns too, just not like ours....

[SkyDekker 1,465]

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Can you explain how the American oil companies convinced OPEC and all the non-OPEC countries to simultaneously raise the price of a barrel of oil worldwide?

Can you explain to me how when the price of crude goes up, the price of the pump goes up the next day. But, when the price of crude goes down, it takes a couple of days for the price at the pump to go down?

[billvon 3,116]

>Can you explain to me how when the price of crude goes up, the
> price of the pump goes up the next day. But, when the price of
> crude goes down, it takes a couple of days for the price at the pump
> to go down?

Because companies enjoy making money more than they enjoy losing money.

[Lucky... 0]

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Can you explain how the American oil companies convinced OPEC and all the non-OPEC countries to simultaneously raise the price of a barrel of oil worldwide?

Can you explain to me how when the price of crude goes up, the price of the pump goes up the next day. But, when the price of crude goes down, it takes a couple of days for the price at the pump to go down?

Couple days hell, it takes months for them to return and only weeks to rise.

[Gravitymaster 0]

While you are doing your research, check into how the oil markets affect the price of oil. OPEC has very little to do with it because they are counterbalanced by the non-OPEC countries.

Now after doing your research, you want to claim world events have an effect on the price of oil, I'll agree with you. That's a far cry from suggesting that Bush and the American Oil Co. colluded to start a war to raise the price of oil. You might also research how much American oil Co's. made per gallon of gas before the war and how much they make now.

[Gravitymaster 0]

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Quack!

what?

Don't expect a lot more from him.

Ask a stupid question............