|FOR IMMEDIATE RELEASE|
MAY 11, 2004
|CONTACT: Consumers Union
Mark Cooper, CFA, (301) 807-1623
Adam Goldberg, CU, (202) 462-6262
Record Gas Prices, Record Oil Industry Profits: Consumers Gouged, Oil Industry Enriched, As Gasoline And Natural Gas Prices Increase By $250 Billion Since January 2000
WASHINGTON - May 11 - Domestic petroleum companies have stuck U.S. gasoline and natural gas consumers with about $250 billion in price hikes since January 2000, resulting in an increase in after-tax windfall profits of $50 to $80 billion to the industry, a report released today by the Consumer Federation of America and Consumers Union concluded. The groups are calling on federal and state authorities to investigate oil company price manipulation as one way to bring prices down to more reasonable levels in the near terms and a strong commitment to increased fuel efficiency in the automobile fleet for the long term.
The report, entitled Fueling Profits: Industry Consolidation, Excess Profits & Federal Neglect, Domestic Causes of Recent Gasoline and Natural Gas Price Shocks, shows While OPEC has taken a bite out of consumer pocketbooks, domestic companies have taken about three quarters of the price increases since January 2000. The report attributes about half of the price increases to changes in domestic pricing behavior that was created by a wave of mergers that swept through the industry in the past decade.
The industry became concentrated in the hands of a few vertically integrated companies and allowed domestic oil companies shut down refineries, reduce stocks, and exploit markets when they become tight, said Mark Cooper, CFAs Director of Research. Since these price increases were about padding the corporate bottom line, not about responding to increased costs, petroleum industry profits have risen to record highs over the period.
Based on results from the first quarter of this year, domestic petroleum industry profits are headed for another record with refining and marketing profits up about 50 percent compared to the first quarter of 2003, Cooper added.
The report shows a dramatic increase in household energy bills for petroleum products:
Consumers have paid the price for increasing the profitability of the domestic oil industry, said Adam Goldberg, a policy analyst in Consumers Unions Washington office. Its time for the Bush Administration to step up and take some action to help out consumers at the pump and at home.
In response, the groups called for :
These policies would build a much more competitive and consumer-friendly energy market in this country for a lot less than the $250 billion consumers already have handed over to the oil companies, Cooper concluded. The $20 billion that the energy bill would give to the oil industry would be better spent as a down payment on a long- term commitment to reduce demand and increase domestic market flexibility.