is big oil rigging gasoline prices?

8/2/2019 Is Big Oil Rigging Gasoline Prices?

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1 Center or American Progress | Is Big Oil Rigging Gasoline Prices?

Is Big Oil Rigging Gasoline Prices?Companies Actions Increase Their Bottom Lines Even

If It Raises Prices

Daniel J. Weiss and Jackie Weidman April 12, 2012

Cable news may be disraced by he laes presidenial candidae gae or celebriy gossip,

bu gasoline prices are a he op o many Americans minds. o beter undersand heir

concerns, he Cener or American Progress Acion Fund commissioned a poll by HarResearch Associaes in March 2012. I ound ha 59 percen o Americans experience

nancial hardship because o high gas prices, wih large majoriies o he public assigning a

signican share o he blame o he major oil companies and Wall Sree speculaors.

Gasoline prices have increased by 63 cens per gallonor 19 percensince he begin-

ning o he year, hiting he highes price ever recorded in any March. Te acors driving

prices, however, are much less clear. Te ac is ha domesic producion is a an eigh-year

high, domesic demand or oil and oil producs is down, and ye gas prices coninue o rise.

Worldwide rends don oer much o a clue, eiher. Te Energy InormaionAdminisraion repors ha worldwide consumpion in he rs quarer o 2012 is

essenially unchanged rom he ourh quarer o 2011, hough i is abou 1 percen

higher han a year ago. Ye he April 10 price o Wes exas Inermediae, or WI, crude

oilsold in he Unied Saeswas $101 per barrel. Bren oil on he European marke

is $120 per barrelor 5 percen higher han las year.

Tere have been some relaively minor supply disrupions in Syria, Souh Sudan, and

Yemen according o a February 2012 repor by he EIA.1 On he oher hand, Libyan

producion is a 81 percen o is pre-civil war capaciy. And Saudi Arabiahe worlds

larges oil producerhas raised is oupu by abou 600,000 barrels per daymore han

in 2011. Despie grea ensions wih Iran over is nuclear weapons program, here has

no ye been a supply disrupion in he Persian Gul.
http://images.politico.com/global/2012/03/120324_gas_price_strategy.htmlhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=Whttp://abcnews.go.com/blogs/business/2012/03/highest-gas-price-recorded-for-march/http://www.whitehouse.gov/blog/2012/02/29/fact-check-all-above-approach-american-energyhttp://www.whitehouse.gov/blog/2012/02/29/fact-check-all-above-approach-american-energyhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTUPUS2&f=Ahttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=Whttp://www.eia.gov/forecasts/steo/tables/pdf/3atab.pdfhttp://www.eia.gov/forecasts/steo/tables/pdf/3atab.pdfhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=Dhttp://www.eia.gov/analysis/requests/ndaa/http://www.eia.gov/analysis/requests/ndaa/http://money.cnn.com/2012/04/03/markets/oil-production/?source=cnn_binhttp://money.cnn.com/2012/04/03/markets/oil-production/?source=cnn_binhttp://www.eia.gov/analysis/requests/ndaa/pdf/ndaa.pdfhttp://mobile.bloomberg.com/news/2012-03-22/iea-says-not-planning-any-coordinated-action-on-oil-supplies-1-?categoryhttp://mobile.bloomberg.com/news/2012-03-22/iea-says-not-planning-any-coordinated-action-on-oil-supplies-1-?categoryhttp://www.eia.gov/analysis/requests/ndaa/pdf/ndaa.pdfhttp://money.cnn.com/2012/04/03/markets/oil-production/?source=cnn_binhttp://money.cnn.com/2012/04/03/markets/oil-production/?source=cnn_binhttp://www.eia.gov/analysis/requests/ndaa/http://www.eia.gov/analysis/requests/ndaa/http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=Dhttp://www.eia.gov/forecasts/steo/tables/pdf/3atab.pdfhttp://www.eia.gov/forecasts/steo/tables/pdf/3atab.pdfhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=Whttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTUPUS2&f=Ahttp://www.whitehouse.gov/blog/2012/02/29/fact-check-all-above-approach-american-energyhttp://www.whitehouse.gov/blog/2012/02/29/fact-check-all-above-approach-american-energyhttp://abcnews.go.com/blogs/business/2012/03/highest-gas-price-recorded-for-march/http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_NUS_DPG&f=Whttp://images.politico.com/global/2012/03/120324_gas_price_strategy.html


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Canada is seeing unexplained high gasoline prices, oo.Te Edmonon Journal, on March

30, repored ha:

Canadians are paying some o he highes prices hey ever have or gasoline, even

hough he amoun ha uel makers pay or he crude oil ha goes ino making i has

been in decline or monhs.

Daa om Saisics Canada on Tursday showed he price processors pay or crude oil

ell 2.4 per cen in February om January, bu he cos o gasoline om reners rose 3.9

per cen. I was hird sraigh monh crude oil prices have declined and second sraigh

monh gasoline prices have increased.

Wha is going on? We know ha oil markes don ollow normal supply-and-demand

rules parly because here are ew subsiues or i, and he Organizaion o Peroleum

Exporing Counries carel can se prices. We also know ha here are oher acors ha

conribue o oil prices in a world marke such as concerns abou poenial supply dis-

rupions due o naural disasers or poliical urmoil in he Persian Gul. Bu even whenwe ake all he normal acors ino accoun, i doesn add up.

Some leading oil expers even express bewildermen abou high oil prices. Reuers jus

repored ha oil specialiss ound ha high oil prices are inconsisen wih curren levels

o supply and demand:

Te realiy oday is ha he marke is well oversupplied. OPEC producion has been

rising consisenly since Sepember and will probably coninue rising urher, said

Colin Smih, energy sraegis a VB Capial.

Similarly, on April 2, Te Wall Sree Journal* deermined ha:

Tere is no shorage o crude oil in he global markes and curren prices aren jusied

by demand-supply undamenals, Qaars energy and indusry miniser said Monday,

easing concerns over supply consrains.

Oil producers are commited o supplying. When you look a demand-supply, here

is no evidence o a shorage o oil anywhere in he world, Mohammed Bin Saleh Al

Sada old reporers.

When i comes o price here are so many elemens--no necessarily par o unda-

menals o supply and demand--bu oher acors.

Many Americans believe Big Oil companies are responsible or hese oher acors and

suspec hese gian corporaions have rigged gasoline prices in heir avor. Could hey be

on o somehing?
http://www.edmontonjournal.com/business/Lower+prices+bringing+savings+pump/6383729/story.htmlhttp://www.edmontonjournal.com/business/Lower+prices+bringing+savings+pump/6383729/story.htmlhttp://www.reuters.com/article/2012/04/04/us-oil-supply-idUSBRE8330NA20120404http://online.wsj.com/article/SB10001424052702303816504577319092765422640.htmlhttp://images.politico.com/global/2012/03/120324_gas_price_strategy.htmlhttp://images.politico.com/global/2012/03/120324_gas_price_strategy.htmlhttp://online.wsj.com/article/SB10001424052702303816504577319092765422640.htmlhttp://www.reuters.com/article/2012/04/04/us-oil-supply-idUSBRE8330NA20120404http://www.edmontonjournal.com/business/Lower+prices+bringing+savings+pump/6383729/story.html


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ony Kos o Leesburg, Florida, commues 80 miles round rip a day or work. He paid

$3.91 he las ime he lled up andblames he seasonal price spikes on oil indusry

price xing. Says Kos, Te oil indusry has inaed he price o gasoline.

Cerainly oil companies have an incenive o suppor high gasoline prices. A March 1,

2012, repor by he Congressional Research Service deermined ha higher gasoline coss:

yield a windall or crude oil producers because he rise in gasoline prices is driven

primarily by higher crude oil prices.

Furher, a Cener or American Progress analysis compared ve years o gasoline price

daa wih quarerly Big Oil pros and ound ha a 1 cen increase in gasoline prices led

o $200 million in pros or he larges oil companies (on a quarerly basis).

o be sure, here is no smoking barrel ha demonsraes Big Oil is rigging he game o

raise gasoline prices. Bu many o he acions heyve aken suspiciously have he eec

o boosing prices. Te ollowing acors sugges ha Big Oil companies, wih help romWall Sree speculaors, are aking seps ha il he gasoline-price playing eld in heir

avor, which in urn increases coss or middle-class amilies:

Te ve bigges oil companies made record pros in 2011 as average annual naion-

wide gasoline prices hi a 36-year high. Ye hese companies also produced less oil. Every1 cen increase in gasoline price yields $200 million in pro (on a quarerly

basis) or he larges oil companies. U.S. expors o rened peroleum producs doubled in he las ve years. Oil companies are holding housands o unexplored or undeveloped leases in ederal

lands and waers. Oil companies are also closing reneries, hreaening o slash uel supplies. Big Oil companies will receive $40 billion in unnecessary ax breaks over he nex

decade.Wall Sree speculaors are rading wice as many oil uures as commercial end users.

In his brie we will look a each o hese o see heir impac on high gasoline prices. We

will also oer recommendaions or reducing our dependence on oil and making us less

vulnerable o gas price spikes.

Repealing the law of supply and demand?

Te economic heory behind supply and price is simple according o Invesopedia:

Te higher he price, he higher he quaniy supplied. Producers supply more a a

higher price because selling a higher quaniy a a higher price increases revenue.
http://news.yahoo.com/spring-time-flowers-high-gasoline-prices-155609394.htmlhttp://www.fas.org/sgp/crs/misc/R42382.pdfhttp://www.americanprogress.org/issues/2012/02/pumped_and_quartered.htmlhttp://www.americanprogress.org/issues/2012/02/big_oil_banner_year.htmlhttp://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0524http://www.americanprogress.org/issues/2012/02/pumped_and_quartered.htmlhttp://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttp://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://www.investopedia.com/university/economics/economics3.asp#axzz1rBRMBqm1http://www.investopedia.com/university/economics/economics3.asp#axzz1rBRMBqm1http://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttp://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.americanprogress.org/issues/2012/02/pumped_and_quartered.htmlhttp://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0524http://www.americanprogress.org/issues/2012/02/big_oil_banner_year.htmlhttp://www.americanprogress.org/issues/2012/02/pumped_and_quartered.htmlhttp://www.fas.org/sgp/crs/misc/R42382.pdfhttp://news.yahoo.com/spring-time-flowers-high-gasoline-prices-155609394.html


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So when oil prices increase, oil companies should be producing more oil. Bu has

no wha he big ve oil companiesBP, Chevron, ConocoPhillips, ExxonMobil, and

Shelldid over he pas six years even hough we experienced high prices in 2008,

2010, and 2011. Te quesion is: Why would heir producion remain low wih prices

rising?

Figure 1 shows ha in 2011 hese companies produced a combined 8.8 million barrelsper day o liquids producion, which includes all peroleum producs.2 Tis is down

rom 9.3 million barrels per day in 2010, and is a producion decline o 6 percen. And

over he pas six years, he big ve cu producion by 12 percen, or 1.2 million barrels

o oil per day. Tis is like empying one o every eigh oil barrels. Chevron was he only

company ha increased is producion over hese years, wih a 6 percen increase.

FIGURE 1

Big Oil pumps out ewer barrels despite higher proitsAnnual worldwide liquid fuels production by the big five companies, 20062011, millions of

barrels per day

Year BP Chevron ConocoPhillips ExxonMobil Shell Total

2006 2.48 1.73 1.11 2.68 2.03 10.03

2007 2.41 1.76 0.98 2.62 1.82 9.59

2008 2.40 1.65 0.92 2.41 1.69 9.07

2009 2.54 1.85 0.97 2.39 1.68 9.41

2010 2.37 1.92 0.91 2.42 1.71 9.34

2011 2.16 1.85 0.80 2.31 1.67 8.78

Percent change in production between 2006 and 2011

2010-2011 -9% -4% -12% -5% -3% -6%

2006 - 2011 -13% 7% -28% -14% -18% -12%

Source: BP, Chevron, ConocoPhillips, ExxonMobil, and Shell Annual Proft Reports, 2006 -2011


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Big Oil profits up: 1 cent higher gas price yields $200 million in profits

Perhaps he big ve companies are conen o produce less oil when prices are high because

higher gasoline prices enable hem o pro rom our pain a he pump wihou having

o produce more oil. Te March Congressional Research Service analysis concluded ha

high gasoline prices drive up he

proabiliy o he oil indusry.And Pumped and Quarered,

a Cener or American Progress

regression analysis o gasoline

prices and Big Oil company pro-

is, projeced he amoun o pro

rom an increase in gasoline prices.

I ound ha every 1 cen increase

in gasoline prices generaed $200

million in pros or he big ve

companies (on a quarerly basis).

So rising gasoline prices led o

higher pros even wih lower

oil producion. Tis means ha

i gasoline prices susain he 60

cen increase since he beginning

o he year, he big ve companies

will make $48 billion more in

2012 han hey would have had

prices remained he same as inhe rs week o he year.

The United States is a net exporter of gasoline and diesel

U. S. oil impors are signicanly lower under Presiden Obama. Te Unied Saes

impored only 45 percen o our oil in 2011. Impors were 57 percen in 2008.

Bu while impors are down, expors are up. Las year he Unied Saesexpored an

average o 2.9 million barrels per day o rened peroleum producs, and was a ne

exporer or he rs ime since 1949. Te Energy Inormaion Adminisraion repors

ha gasoline expors were more han 62 percen higher in 2011 compared o 2010, and

he Congressional Research Service recenly deermined ha gasoline expors coninue

o grow in 2012:


FIGURE 2

Gasoline prices go up while big ive oil production drops

Gasoline prices vs. big five oil production, 20062011

2006 2007 2008 2009 2010 2011

Annual big five oil company production

in millions of barrels per day Average annual gasoline prices per gallon

Average annual

gasoline price

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

8.0

8.5

9.0

9.5

10.0

10.5

11.0

Average daily oil

production by big

five companies

Source:Energy Inormation Administration; big fve companies annual reports
http://www.americanprogress.org/issues/2012/02/pumped_and_quartered.htmlhttp://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html?_r=4&hphttp://www.eia.gov/totalenergy/data/monthly/pdf/sec3_3.pdfhttp://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.eia.gov/todayinenergy/detail.cfm?id=5290http://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_a.htmhttp://www.fas.org/sgp/crs/misc/R42382.pdfhttp://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_a.htmhttp://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_a.htmhttp://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_a.htmhttp://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_a.htmhttp://www.fas.org/sgp/crs/misc/R42382.pdfhttp://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_a.htmhttp://www.eia.gov/todayinenergy/detail.cfm?id=5290http://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.eia.gov/dnav/pet/pet_move_exp_a_EP00_EEX_mbblpd_a.htmhttp://www.eia.gov/totalenergy/data/monthly/pdf/sec3_3.pdfhttp://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html?_r=4&hphttp://www.americanprogress.org/issues/2012/02/pumped_and_quartered.html


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Preliminary daa sugges ha nished moor gasoline expors have averaged abou

600,000 b/d [barrels per day] in he rs seven weeks o 2012. For conex, U.S. gaso-

line consumpion is abou 8.7 million b/d.

Tis means ha gasoline expors

are 7 percen o gasoline produc-

ion in 2012, up rom 5 percen in2010.As o March 30, 2012, he

Unied Saes expors 956,000 bar-

rels o diesel per day. Tis is a 46

percen increase rom he annual

average or 2010 when we were

exporing 656,000 barrels a day.

Te Energy Inormaion

Adminisraion repors ha:

Driven by changes in world

markes and global rening

economics, U.S. gasoline expors

began rising in 2010, and by

December o ha year, were

wo-hirds higher han hose

jus one year earlier, an upward

rend ha coninued ino 2011.

Big Oil companies are largely behind his expor boos, selling signicanly more gaso-line and diesel uels o oher naions. On March 27 Te Wall Sree Journal*repored wo

o he big ve oil companiesConocoPhillips and Shellare more ocused on expor-

ing U.S.-produced uel o markes where here is greaer demand.

Te Energy Inormaion Adminisraion noes ha record gasoline expors do no appear

o be driving gasoline prices. Bu i also poins ou ha

Gul Coas reneries expor produc raher han send more o he Eas Coas, espe-

cially he Norheas [hey] have a compeiive advanage in some world markes.

Tey make more money exporing rened producs o Europe and Souh America com-

pared o selling hem o American ciizens because hey have many expor advanages,

including easier access o waer or shipping uel, and a locaion allowing or shor-haul

voyages o growing Lain American markes.

FIGURE 3

U.S. exports o gasoline and diesel uel rise with prices

Average annual gasoline and diesel exports, 20072011

0

100

200

300

400

500

600

700

800

900

1,000

0

$.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Average annual diesel or gasoline

exports in thousands of barrels per day

Average annual diesel

or gasoline price per gallon

2007 2008 2009 2010 2011

Average annual diesel price

Average annual gasoline price

Diesel exports

Finished motor gasoline exports

Source: Energy Inormation Administration
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGFRPUS2&f=4http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wdiexus2&f=whttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MDIEXUS2&f=Ahttp://www.eia.gov/todayinenergy/detail.cfm?id=5490http://www.eia.gov/todayinenergy/detail.cfm?id=5490http://online.wsj.com/article/SB10001424052702303812904577299541448541650.htmlhttp://online.wsj.com/article/SB10001424052702303812904577299541448541650.htmlhttp://www.eia.gov/todayinenergy/detail.cfm?id=5490http://www.eia.gov/todayinenergy/detail.cfm?id=5490http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MDIEXUS2&f=Ahttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wdiexus2&f=whttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGFRPUS2&f=4


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Tese reners also rene Wes exas Inermediae crude oil, which is nowypically $18

o $22 per barrel cheaper han he Bren crude used by European reners. Tis makes U.S.

rened diesel cheaper compared o European produc.

For hese reasons, Gul reneries choose o expor a growing amoun o produc raher

han selling i in he Unied Saes. Alhough EIA did no nd a direc link beween

expors and higher gasoline prices, exporing uel raher han selling i here could depriveour marke o invenory ha could help ease price pressure.

Te expor o raw peroleum is already eecively banned in he Unied Saes.3 Limiing

expors o rened producs rom peroleum produced rom public lands or waersas

some members o Congress are rying o docould increase he supply o gasoline and

diesel uel here and poenially reduce prices.

Sen. Rober Menendez (D-NJ), or example, inroduced heAmerican Oil or American

Families Ac, S. 2211, on March 9, 2012. I mandaes ha:

Peroleum exraced om public land in he Unied Saes (including land locaed on

he ouer Coninenal Shel), or a peroleum produc produced om he peroleum,

may no be expored om he Unied Saes.

And Rep. Ed Markey (D-MA) jus inroduced a similar bill in he Househe Keep

Americas Oil Here Ac, H.R. 4325. Upon inroducion, Rep. Markey said:

Te oil below axpayer-owned lands belongs o he American people, and should say

here in America o help American consumers and srenghen our naional securiy.

Te bill saes ha:

Te Secreary o he Inerior may accep bids on any new oil and gas leases o Federal

lands (including submerged lands) only om bidders ceriying ha all oil produced

and all rened peroleum producs produced om such oil, shall be oered or sale

only in he Unied Saes.

Te Unied Saes had a ban on he expor o crude oil produced in he norh slope o

Alaska rom 1973 o 1995. Insead, his oil was sen o Caliornia, increasing supplies

here. In 2005 he Congressional Research Service ound some indicaion ha Wes

Coas gasoline prices were lower during he expor ban:

Alaska oil producion peaked a 2.0 mbd [million barrels per day] in 1988, creaing a

crude surplus on he Wes Coas. By 1995, when expor legislaion was enaced, oupu

had declined [and] whaever surplus had exised diminished.
http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htmhttp://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htmhttp://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://democrats.naturalresources.house.gov/press-release/markey-holt-owens-introduce-bill-keep-america-s-oil-fuel-americahttp://democrats.naturalresources.house.gov/press-release/markey-holt-owens-introduce-bill-keep-america-s-oil-fuel-americahttp://assets.opencrs.com/rpts/RS22142_20050506.pdfhttp://assets.opencrs.com/rpts/RS22142_20050506.pdfhttp://democrats.naturalresources.house.gov/press-release/markey-holt-owens-introduce-bill-keep-america-s-oil-fuel-americahttp://democrats.naturalresources.house.gov/press-release/markey-holt-owens-introduce-bill-keep-america-s-oil-fuel-americahttp://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://menendez.senate.gov/newsroom/press/release/?id=a84b79a3-3ed5-4bb0-9736-f93d7ce08a56http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htmhttp://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm


8/17


In 1995, Energy Inormaion Adminisraion (EIA) daa showed Wes Coas pump

prices o be only 5 cens per gallon above he naional average. Bu by 1999 Wes Coas

gasoline was 15 cens per gallon higher.

When Alaskan oil exports ceased, the gasoline price diferential between the West

Coast and the national average did decline, a leas or a ew years. [emphasis added]

I is unclear wheher a new ban on expors o producs rened rom oil rom public

lands and waers would make a signican dierence in gasoline prices, as he Alaska ban

seemed o do or a leas some ime. Te wo aoremenioned bills were no inroduced

in March 2012 when he Congressional Research Service wroe:

o wha degree prohibiing gasoline expors would reduce prices is unclear. Some

conend ha here may be a decline in gasoline prices i gasoline expors were resriced.

Ohers [American Peroleum Insiue] sugges here will be no decline in gasoline

prices i such measures were adoped.

Bu cerainly an addiional domesic supply o gasoline and diesel produced rom

American oil would no raise prices, and i migh lower hem. Te botom line is ha i

makes litle sense o send o oher counries rened uels made rom oil produced rom

lands and waers owned by all Americans a a ime o rising gasoline prices.

Big Oil companies sitting on thousands of leases

Te big ve oil companies smaller oupu also may be due o he housands o unexplored

or undeveloped leases hey hold on ederal lands and waers. All old, Big Oil companieshave 7,000 approved bu idle drilling permis or ederal lands. ADeparmen o Inerior

analysis concluded ha:

More han 70 percen o he ens o millions o oshore acres under lease are inacive,

neiher producing nor currenly subjec o approved or pending exploraion or developmen

plans. Tis includes almos 24 million inacive leased acres in he Gul o Mexico, which

poenially could hold more han 11 billion barrels o oil.

Ou o a oal o over 38 million leased onshore acres, almos 22 million leased onshore

acres ha are no being used.

Holding undeveloped leases and unused permis sill benes oil companies because i

can increase he size o heir poenial oil reserves. Tese leases also keep heir com-

peiors rom producing oil rom hese places. Ignoring hese undeveloped areas, he

American Peroleum Insiue alsely claims ha he Obama adminisraion is blocking
https://3678193604200645839-a-1802744773732722657-s-sites.googlegroups.com/site/gasolinepricesinformationbrief/embed-google-map/Oil%20and%20Gas%20Drilling%20on%20Federal%20Lands%20-%20%20Some%20Key%20Facts%20March%202012.pdf?attachauth=ANoY7cqVt_AILIiEn6I2ihOvcfSNuS9JyknPcdkEBb4bX2Y-jpuKUS_zmxm5Zz9CtRN0LLsS2UCjCUnsRfEzgYP62NiaLkodqskbUmj6_kY8_XwRM2-P0qlPqAsmn6W7RZc1qMduYpS0M0bkfKa8lcVRXh8v9gVV4640sM1UA9bx10xQqm6gMjC4OtbaHs7AmBNZ81Wx0bAbQ2evBiMM7N-X1WU2R3k30mt62Z9nPpj9Xh-Tv46L-Kd4aiStCrhkOAv3_7Eb3aYbklyFt32axqD50rLlSXPVdaHcpLDFZvoKh7s52oD9RTU9asFnFuvUixzxM0RZAqAk&attredirects=0http://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttp://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttp://www.api.org/news-and-media/news/newsitems/2012/mar-2012/api-more-domestic-oil-and-natural-gas-needed-for-jobs-and-revenue.aspxhttp://www.api.org/news-and-media/news/newsitems/2012/mar-2012/api-more-domestic-oil-and-natural-gas-needed-for-jobs-and-revenue.aspxhttp://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttp://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-Oil-and-Gas-Leases.cfmhttps://3678193604200645839-a-1802744773732722657-s-sites.googlegroups.com/site/gasolinepricesinformationbrief/embed-google-map/Oil%20and%20Gas%20Drilling%20on%20Federal%20Lands%20-%20%20Some%20Key%20Facts%20March%202012.pdf?attachauth=ANoY7cqVt_AILIiEn6I2ihOvcfSNuS9JyknPcdkEBb4bX2Y-jpuKUS_zmxm5Zz9CtRN0LLsS2UCjCUnsRfEzgYP62NiaLkodqskbUmj6_kY8_XwRM2-P0qlPqAsmn6W7RZc1qMduYpS0M0bkfKa8lcVRXh8v9gVV4640sM1UA9bx10xQqm6gMjC4OtbaHs7AmBNZ81Wx0bAbQ2evBiMM7N-X1WU2R3k30mt62Z9nPpj9Xh-Tv46L-Kd4aiStCrhkOAv3_7Eb3aYbklyFt32axqD50rLlSXPVdaHcpLDFZvoKh7s52oD9RTU9asFnFuvUixzxM0RZAqAk&attredirects=0


9/17


he producion o oil rom ederal lands and waers. Insead, companies should explore

and develop he leases hey already have beore we open proeced ederal lands and

waers o oil producion.

Refinery capacity, which affects prices, grew until recently

An imporan acor ha can aec gasoline supplies and prices is peroleum reneries

capaciy o process crude oil ino gasoline, diesel, or oher uels. Te less capaciy ren-

eries have, he less crude hey are able o process ino uels or use in he economy. And

ha equals less supply and hereore higher prices.

Limied rening capaciy

has been a big concern. Te

Naional Energy Policy

produced in May 2001 by Vice

Presiden Dick Cheney warnedha:

No a single major oil renery

has been buil in he Unied

Saes in nearly a generaion,

causing he kind o botlenecks

ha lead o sudden spikes in he

price o gasoline.

Tis remained rue hroughouhe eigh years o he Bush admin-

israion. Tis concern, however,

ignored he expansion o exising

reneries ha began in he mid-

1990s. Te Energy Inormaion

Adminisraion measures heU.S.

Percen Uilizaion o Renery

Operable Capaciy, or he proporion o renery capaciy ha is operaing and able o

conver crude oil ino uels. EIA repors ha rening capaciy seadily increased beginning

in 1997 and peaked a 17.1 million barrels per day in 2008. Tis was a 12 percen increase,

or slighly more han a 1 percen increase per year. Renery capaciy ell in 2009 and 2010

and slighly increased in 2011, hough i was sill 1 percen lower han in 2008.

In heory, capaciy and producion should boh increase a he same ime ha prices

rise due o supply and demand. Figure 4 shows ha rom 2009 o 2010 he capaciy o

produce more gasoline rose by 3.4 percen, while acual gasoline producion was a.

FIGURE 4

Higher gasoline prices dont increase refning capacity or gasoline production

Changes in refinery capacity, gasoline production, and prices, 20072011

Percent change in refinery capacity, gasoline production, and gasoline prices

-30%

-20%

-10%

0%

10%

20%

30%

2007 2008 2009 2010 2011

Utiization capacityGasoline production

Gasoline prices

Source: Energy Inormation Administration data; CAP Analysis
http://www.wtrg.com/EnergyReport/National-Energy-Policy.pdfhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOCGGUS2&f=Ahttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOCGGUS2&f=Ahttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=Mhttp://www.wtrg.com/EnergyReport/National-Energy-Policy.pdf


10/17


Capaciy and gasoline producion boh dropped in 2011when gasoline averaged $3.53

per gallona price increase o 27 percen rom 2010.

Ineresingly, gasoline producion ell by nearly 3 percen beween 2010 and 2011, even

hough capaciy grew in 2010, and dropped only a iny bi in 2011.

Rising prices should lead o moreno lessgasoline producion, paricularly whenhere is more rening capaciy.

Closing refineries means higher gasoline prices

Higher oil prices can make some reneries uneconomical o operae. Te Energy

Inormaion Adminisraion jus repored ha higher oil prices on he Eas Coas:

can resul in lower renery uilizaion raes and can aec decisions by reners

o idle capaciy.

wo Eas Coas reneries idled capaciy due o unavorable rening economics,

while anoher rener may sell or shu down is aciliy.

Bu he emporary closure o peroleum reneries can also reduce gasoline supplies

while boosing prices. Te Congressional Research Service said in March ha recen

renery closures in he Unied Saes, Europe, and elsewhere may also conribue o

higher gasoline prices. Closures can occur due o repairs, expansion, or o reool hem

o produce a dieren gasoline mix or oher peroleum producs. Someimes older, ine-

cien reneries permanenly cease producion.

Indusry closings o reneriesincluding several he big ve oil companies ownha

produce gasoline and diesel rom crude oil are conribuing o high gasoline prices now.

On January 28 USA odayrepored ha:

Over he las several years, he rening indusry has shu down abou 1 million barrels

per day o rening capaciy aimed a he Eas Coas.

Te Associaed Press noed on April 7 ha recen renery closings have boosed gaso-

line prices more han in recen years:

Tis years spring surge is more exreme han usual because hree reneries ha serve

he Eas Coas were shu down las all and anoher one may be closed in July. Tas

hreaening supplies in one o he counrys mos densely populaed regions, and push-

ing prices higher everywhere.
http://www.eia.gov/forecasts/steo/realprices/http://www.eia.gov/forecasts/steo/realprices/http://www.eia.gov/todayinenergy/detail.cfm?id=5730&src=emailhttp://www.eia.gov/todayinenergy/detail.cfm?id=5730&src=emailhttp://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://www.huffingtonpost.com/2012/04/09/gas-prices-4-dollar-gallon-record_n_1411862.htmlhttp://www.huffingtonpost.com/2012/04/09/gas-prices-4-dollar-gallon-record_n_1411862.htmlhttp://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://www.eia.gov/todayinenergy/detail.cfm?id=5730&src=emailhttp://www.eia.gov/todayinenergy/detail.cfm?id=5730&src=emailhttp://www.eia.gov/forecasts/steo/realprices/http://www.eia.gov/forecasts/steo/realprices/


11/17


EIA repored in February 2012 ha wo Eas Coas reneries idled capaciy due o

poor economics. ConocoPhillips and Sunoco own hese reneries, and hey represen

nearly one-quarer o he operaing crude uni capaciy on he Eas Coas.

More ominously, a Sunoco renery in Philadelphiawhich makes up anoher quarer

o Eas Coas capaciywill close in July i [Sunoco] can sell i and exi he business,

repored Te Wall Sree Journal*on March 27. Te Energy Inormaion Adminisraionwarns ha:

I he Sunoco Philadelphia renery closes, price impacs are highly uncerain. I areas

canno be adequaely supplied in he shor erm, prices can spike.

Tese aren he only reneries whose closure may spark higher gasoline prices, hough.

Te Wes Coas also had reneries close. EIA repors ha:

renery closures, ouages, and a lack o access o less expensive crude oil reduced

inpus in 2011 o reneries in PADDs 4 and 5 [Rocky Mounain and Wes Coasareas, respecively] and helped drive down uilizaion raes.4

Te BP-owned Cherry Poin reneryin Blaine, Washingon, suered a huge re on February

17, 2012. I processes as much as 230,000 barrels o crude oil daily, which is made ino 3.5

million gallons o gasoline, 2.2 million gallons o diesel, and 3 million gallons o je uel and

oher producs. Cherry Poin supplies one-h o Washingon saes gasoline.

BP will keep he renery closed unil April or pos-re repairs and spring mainenance.

Oher Wes Coas reneries could close as well.Andrew Lipow, presiden o Lipow OilAssociaes, warned ha:

Te rening capaciy was oversupplied so produc prices have o rise o give he ren-

ers beter pro margins or oherwise youll see more o hem going ou o business.

Probably he nex expecaion is o see reners going ou o business on he wes coas.

Bu, conrary o Lipows expecaion, produc prices are rising, and reneries are sill closing.

Renery closures ouside he Unied Saes can also increase gasoline prices. Hovensas

U.S. Virgin Islands aciliyha rened 350,000 barrels per day closed in February. I

shipped more han hal o is produc o he Eas Coas.

Valero Corp., he worlds larges independen rener, idled is plan in Aruba on March

27 ciing unavorable renery economics and he oulook or coninued unavorable

renery economics. Te renery has a capaciy o 235,000 barrels per day. I supplied

producs o New Jersey and elsewhere on he Eas, Gul, and Wes Coass.
http://www.eia.gov/todayinenergy/detail.cfm?id=5470http://online.wsj.com/article/SB10001424052702303812904577299541558541650.htmlhttp://www.eia.gov/todayinenergy/detail.cfm?id=5470http://seattletimes.nwsource.com/html/localnews/2017544487_bpfire19m.htmlhttp://seattletimes.nwsource.com/html/localnews/2017632070_apwabprefinery.htmlhttp://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://www.hovensa.com/http://www.hovensa.com/http://www.valero.com/NewsRoom/Pages/PR_20120319_0.aspxhttp://www.valero.com/NewsRoom/Pages/PR_20120319_0.aspxhttp://www.hovensa.com/http://www.hovensa.com/http://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://www.usatoday.com/money/industries/energy/story/2012-01-28/cnbc/52825378/1http://seattletimes.nwsource.com/html/localnews/2017632070_apwabprefinery.htmlhttp://seattletimes.nwsource.com/html/localnews/2017544487_bpfire19m.htmlhttp://www.eia.gov/todayinenergy/detail.cfm?id=5470http://online.wsj.com/article/SB10001424052702303812904577299541558541650.htmlhttp://www.eia.gov/todayinenergy/detail.cfm?id=5470


12/17


Valero is closing a renery even wih rising gasoline prices. Valero had apro o $2.1

billion in 2011. I was so ush wih cash ha i donaed $5.1 million in a ailed eor

o pass Proposiion 23 in Caliornia in 2010, which would have eecively blocked he

saes reducion in carbon dioxide polluion.

Finally, he bankrupcy o he Peroplus renery in he Unied Kingdom could raise

gasoline prices in he Unied Saes since we impor 100,000 barrels o gasoline rom idaily. On February 21 McClachy Newspapers cied Peropluss bankrupcy and BPs

renery re in Washingon sae as driving orces behind emporarily crimped gasoline

supply along he Wes Coas. Te Congressional Research Service also noed in heir

March repor ha as a resul o hese [renery] closures, Europe may also seek o draw

greaer supplies o diesel uel rom U.S. reneries.

Big Oil gets $40 billion in tax breaks despite its megaprofits

from high prices

Presiden George W. Bush, a ormer oil man, suppored he eliminaion o Big Oil ax

provisions in 2005. He said:

I will ell you wih $55 oil, we don need incenives o he oil and gas companies o

explore. Tere are pleny o incenives. Wha we need is o pu a sraegy in place ha

will help his counry over ime become less dependen.

Te high gasoline prices in he rs quarer o 2012 sugges ha he big ve companies

will reap even larger pros his year compared o heir record-seting haul las year. A he

same ime, hese companies will receive a major porion o he coming decades $40 billionin ax breaks or Big Oil. Congress should eliminae hese ax breaks and insead inves

hese scarce dollars in he developmen and commercializaion o echnologies ha will

reduce oil and gasoline use, including elecric vehicles and public ransporaion.

A May 2011 Congressional Research Service assessmen o removing hese ax provi-

sions ound ha hey would have litle eec on oil supply and gas prices:

A small increase in axes would be less likely o reduce oil oupu, and hence increase

peroleum produc (gasoline) prices.

Even i he changes in axes did impac domesic, or overseas exploraion and develop-

men aciviy, ha does no necessarily imply ha less oil would be available in he U.S.

marke. More migh be impored, wih litle or no eec on gasoline prices.

Ye hese ax breaks remain in place. On March 29, 2012, heSenae voed 51-47 or he

Repeal Big Oil Subsidies Ac, S. 2204, sponsored by Sen. Rober Menendez (D-NJ),

which would have eliminaed $24 billion in ax breaks or he big ve oil companies.
http://phx.corporate-ir.net/phoenix.zhtml?c=100647&p=irol-newsArticle&ID=1654533http://phx.corporate-ir.net/phoenix.zhtml?c=100647&p=irol-newsArticle&ID=1654533http://maplight.org/content/california-prop-23-nov-2010http://maplight.org/content/california-prop-23-nov-2010http://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://www.nytimes.com/2008/03/03/opinion/03mon4.html?_r=2http://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://democrats.senate.gov/pdfs/20110511-crs-analysis-on-gas-prices.pdfhttp://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00063http://menendez.senate.gov/newsroom/press/release/?id=9d10e72a-accb-40b2-b61b-c7d11833c8bahttp://menendez.senate.gov/newsroom/press/release/?id=9d10e72a-accb-40b2-b61b-c7d11833c8bahttp://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00063http://democrats.senate.gov/pdfs/20110511-crs-analysis-on-gas-prices.pdfhttp://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://www.americanprogress.org/issues/2011/05/big_oil_tax_breaks.htmlhttp://www.nytimes.com/2008/03/03/opinion/03mon4.html?_r=2http://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://maplight.org/content/california-prop-23-nov-2010http://maplight.org/content/california-prop-23-nov-2010http://phx.corporate-ir.net/phoenix.zhtml?c=100647&p=irol-newsArticle&ID=1654533http://phx.corporate-ir.net/phoenix.zhtml?c=100647&p=irol-newsArticle&ID=1654533


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Unorunaely, i ailed because a super majoriy o 60 voes was necessary o pass i.

Te 47 senaors who voed agains he bill received $23.5 million in campaign cash rom

oil companies, our imes more money han senaors who voed or he bill.

ANew York imes ediorial on March 30 concluded ha Big Oil rigged he voe by using

is enormous pros o shower campaign conribuions on senaors and underake ahigh-pressure adverising campaign:

Presiden Obama and he Senae Democras have again allen shor in heir ques o

eliminae billions o dollars in unnecessary ax breaks or an oil indusry ha is rolling in

enormous pros. A big reason or ha ailure is ha some o hose pros are being con-

inuously recycled o win he suppor o pliable legislaors, underwrie misleading adveris-

ing campaigns and advance an energy policy dened solely by more oil and gas producion.

Wall Street speculators are driving up prices

ension in he Persian Gul and minor supply disrupions are no he sole cause o

high oil prices. Wall Sree speculaors are aking advanage o ears abou uure sup-

ply disrupions o drive up prices or heir own pro. On February 14Bloomberg

Businessweekcied om Kloza, chie oil analys or he Oil Price Inormaion Service,

who says ha speculaors are helping o increase oil prices, and, in urn, gas prices:

Much o he increase [in oil prices] is due o speculaive money has fowed ino gaso-

line uures conracs since he beginning o he year, mosly om hedge unds and large

money managers. Weve seen abou $11 billion o speculaive money come in on helong side o gas uures, [Kloza] says. Each o he las hree weeks weve seen a record

ne-long posiion being aken.

Furher, a February 21 analysis o oil rades byMcClachy Newspapers concluded ha

Wall Sree speculaors are behind sharply rising oil and gas prices. I deermined ha:

While ension over Iran has racheed up over he las ew monhs, he price o oil and gaso-

line has leaped ar beyond convenional supply and demand variables. Financial specula-

ors are piling ino he marke, orqueing he Iranian ear acor ino ever-higher prices.

Hisorically, nancial speculaors accouned or abou 30 percen o oil rading in com-

modiy markes, while producers and end users made up abou 70 percen. oday is

almos he reverse.

A McClachy review o he laes Commimen o raders repor om he Commodiy

Fuures rading Commission, which regulaes oil rading, shows ha producers and mer-
http://thinkprogress.org/green/2012/03/29/454853/senators-who-voted-to-protect-oil-tax-breaks-received-23582500-from-big-oil/http://www.nytimes.com/2012/03/31/opinion/big-oils-bogus-campaign.html?_r=1http://www.businessweek.com/articles/2012-02-15/rising-gas-prices-not-demand-drivenhttp://www.businessweek.com/articles/2012-02-15/rising-gas-prices-not-demand-drivenhttp://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.htmlhttp://www.businessweek.com/articles/2012-02-15/rising-gas-prices-not-demand-drivenhttp://www.businessweek.com/articles/2012-02-15/rising-gas-prices-not-demand-drivenhttp://www.nytimes.com/2012/03/31/opinion/big-oils-bogus-campaign.html?_r=1http://thinkprogress.org/green/2012/03/29/454853/senators-who-voted-to-protect-oil-tax-breaks-received-23582500-from-big-oil/


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chans made up jus 36 percen o all conracs raded in he week ending Feb. 14. Ta

same week, open ineres, or he oal ousanding oil conracs or nex-monh delivery o

1,000 barrels o oil (abou 42,000 gallons), sood near an all-ime high above 1.486 mil-

lion. Speculaors wholl never ake delivery o oil made up 64 percen o he marke.

Wall Sree speculaors role in driving up prices in 2012 is consisen wih evaluaions o

previous price spikes. Commodiy Fuures rading Commissioner Bar Chilon recenlycied numerous independen sudies ha indicae excessive Wall Sree speculaions

played a signican role in earlier evens.

On March 5, Te Washingon Posreached a similar conclusion abou speculaion in cur-

ren and previous oil price shocks:

Many analyss agree ha rading aciviy is pushing up oil prices over and above wha

supply and demand would normally dicae and much o his has been driven by

ear over a possible confic wih Iran. Speculaion has infaed oil prices by more han

30%, says Fadel Ghei, an oil analys a Oppenheimer & Co. Tas in line wih oheresimaes:A recen paper (pd) by he Federal Reserve Bank o S. Louis ound ha

nancial speculaive demand shocks were responsible or a leas 15 percen o he

huge run-up in oil prices beween 2004 and 2008.

Even oil execuives undersand ha Wall Sree speculaion drives up oil prices. A a

hearing beore he Senae Finance Commitee on May 12, 2011, Sen. Maria Canwell

(D-WA) asked ExxonMobil CEO Rex illerson, Wha do you hink he price would be

oday, i i was based on undamenals o jus supply and demand? He responded: Is

going o be somewhere in he $60 o $70 range.

In ac, a he ime o he hearing,WI crude oil was selling or $98 a barrel40 per-

cen o 63 percen more han illersons prediced range.

Solutions for high gas prices

Te Congressional Research Service in March concluded ha long-erm invesmens in

reducing oil use can shield Americans rom high gasoline prices in he uure:

Many o he policies ha can address he impac o rising gasoline prices on consum-

ers are long-erm in naure due o he long-erm naure o invesmens which produce

energy or consume energy.

Congress mus promply adop soluions ha will reduce our dependence on oil, sop

giving axpayer money o a highly proable indusry, and make us less vulnerable o

price spikes. Tese include:
http://cftc.gov/PressRoom/SpeechesTestimony/chiltonstatement022412http://www.washingtonpost.com/blogs/ezra-klein/post/are-speculators-to-blame-for-our-gas-price-woes/2012/03/05/gIQAqMS8sR_blog.htmlhttp://research.stlouisfed.org/wp/2011/2011-027.pdfhttp://www.usclimatenetwork.org/resource-database/big-oil-ceos-hearing-transcripthttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=Dhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=Dhttp://www.usclimatenetwork.org/resource-database/big-oil-ceos-hearing-transcripthttp://research.stlouisfed.org/wp/2011/2011-027.pdfhttp://www.washingtonpost.com/blogs/ezra-klein/post/are-speculators-to-blame-for-our-gas-price-woes/2012/03/05/gIQAqMS8sR_blog.htmlhttp://cftc.gov/PressRoom/SpeechesTestimony/chiltonstatement022412


15/17


16/17


We mus coninue o expose oil companies measures ha avor heir own pros over

he ineress o American consumers, and reveal heir deep poliical and nancial ies

o heir allies in Congress ha coninue o deend heir billions o dollars in ax breaks

while opposing measures o reduce oil dependence and gasoline coss.

Daniel J. Weiss is a Senior Fellow and Direcor o Climae Sraegy and Jackie Weidman

is he Special Assisan or Energy Policy a he Cener or American Progress.


17/17

Endnotes

1 According to EIA data, Syrias liquid uels supply estimates remained stable while Sudan and Yemens supply dropped 200,000 and100,000 barrels per day, respectively.

2 The Energy Inormation Administration classifes liquid uels as all petroleum products, natural gas li quids, biouels, and liquidsderived rom other hydrocarbon sources (coal to liqui ds and gas to liquids). Not included are compressed natural gas (CNG),liquefed natural gas (LNG), and hydrogen.

3 The Congressional Research Service notes that Domestically produced crude oil cannot be exported as per provisions o the

Energy Policy and Conservation Act as well as several other statutes. There are a ew exceptions including or c rude o oreignorigin, crude exports to Canada, or where the President determines it is in the national interest to allow exports (15 CFR 754.2).See: Congressional Research Service, Rising Gasoline Prices 2012 (2012), available at http://ulltextreports.com/2012/03/09/crs-rising-gasoline-prices-2012/.

4 According to the Energy Inormation Administration, the utilization rates are the same as refnery utilization capacity, which isthe ratio o the total amo unt o crude oil, unfnished o ils, and natural gas plant liquids run through crude oil distillation units tothe operable capaci ty o these units. See: Glossary - U.S. Energy Inormation Administration (EIA), available at http://w ww.eia.gov/tools/glossary/index.cm?id=Refnery%20capacity%20utilization.

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is big oil rigging gasoline prices?

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