Wednesday, May 10, 2006

Mirabile dictu - the oil companies are not passive victims

The Josef Hebert at the AP has a timely story out. The oil companies have been artificially restricting supply to indirectly raise gas prices.
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.
By delaying the refinery building until there were more market pressures, there will also be an incentive to bypass environmental requirements when the refineries are built. That's my prediction, in any case.

I am glad for the high prices and the market forces that will force people to conserve more and hopefully make research into alternative energy sources. However, when a fraction of the high prices is a just simple wealth transfer from everyone to the oil companies, especially when they deliberately helped make the problem worse, I'm back with the group of lefties I ordinarily despise, the ones that are calling for price-gouging legislation.

This is a bad moment for law-making in America. There are real problems (disastrous war, global warming, terrorism, zero savings rates, peak oil scenario) and there are problems that do not threaten the nation (immigrants, national anthem in Spanish, drastically low Republican popularity, steady stream of Republican indictments). Little good can come of this combination, not with the weak and corrupt leadership in Congress and the White House eager to change the channel and resume their looting.


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