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9/22/2017 12:11:25 AM
Posted: 8/19/2005 7:52:52 PM EDT

Democrats turn up heat on US pump prices
Aug 19 5:22 PM US/Eastern

By Chris Baltimore

WASHINGTON (Reuters) - U.S. Senate Democrats turned up the heat on the White House on Friday to act in the face of record-high U.S gasoline pump prices.

The same day, the Senate Energy Committee set a September 8 hearing on what's behind the prices, which hit a record $2.55 a gallon this week.

That's about 68 cents higher than just a year ago and the biggest weekly increase on record, which has triggered fears that high energy costs could hurt U.S. economic growth.

Lawmakers admit there is no short-term fix to pain at the pump, but are nervous about political fall-out. Gasoline prices are sure to be a hot topic when Congress returns from its recess next month.

Wal-Mart, the world's biggest retailer, warned this week that high gasoline prices have stunted U.S. consumer spending.

"Today's gasoline prices are taking a severe toll on Americans' pocketbooks," said Republican Sen. Pete Domenici of New Mexico, energy panel chairman. "Consumers are anxious."

The hearing will focus on global oil demand, refinery capacity constraints and the impact of futures market speculation on energy prices, Domenici said.

The panel said it has not set its witnesses.

Meanwhile, Democrats urged the White House to act.

Senate Minority Leader Harry Reid on Friday said the Bush administration should require U.S. oil companies to disclose their fuel pricing policies and production costs.

In a letter to the White House, Reid also said the Federal Trade Commission should investigate instances where a state's retail prices rise 20 percent in any given week "to determine if the price of gasoline is being artificially manipulated."

Past FTC probes into U.S. oil company pricing policies have found no sign of abuse.

"This one has already being done," White House spokesman Trent Duffy said. "The FTC and the Justice Department have been keenly watching for this type of activity for the past two years."

Duffy also said that Democrats' attempts to prevent oil drilling in the Alaska's Arctic National Wildlife Refuge, or ANWR, have kept supplies tight.

"Commonsense steps we've tried to take, like increasing domestic oil production by allowing drilling in a small portion of ANWR, have been blocked by Democrats for years," Duffy said.

Separately, Democratic Sen. Bill Nelson of Florida said the White House should ask oil companies for a voluntary, temporarily freeze on prices that they charge gasoline distributors.

Duffy said that price controls in any form are "terribly toxic to the economy" but added he had not seen the specific proposal.

The American Petroleum Institute, the biggest industry lobbyist, said U.S. oil companies are not benefiting unduly from high energy prices, and said that global crude oil shortages and oil prices near $70 a barrel are to blame.

It costs about $2 a gallon for U.S. refiners to turn crude oil into gasoline before transportation and distribution costs are added, said John Felmy, an API economist.

"When you take all those costs out you're not finding unreasonable profits for everything we have to do to get (gasoline) to consumers," Felmy said. "These requests are just unfortunate."

U.S. consumers use about 9 million barrels of gasoline a day -- about 380 million gallons worth.

Ever penny increase in gasoline prices means that U.S. consumers pay about $1.39 billion extra at the pump each year, according to Senate Energy Committee data.

Ok, wheres the BS flag when you need it.
Since when has it cost about $2.00 to make gas out of oil?
If thats the case, then every one was loosing money a year ago when gas was less than 2.00/gal?
Link Posted: 8/19/2005 8:03:11 PM EDT
Wash the sand out of your mangina. When crude is running $60/barrel, that is $1.43 a gallon. Take into account not all crude can be converted to gasoline, it makes sense.

Link Posted: 8/19/2005 8:13:24 PM EDT
You're right, oil refineries have been losing money. My sister in law is a chemical engineer in Kentucky. In a nutshell, she explained that oil refineries have been put under such strict regulations by the EPA, that production cost for the refineries is incredibly high. She also states that gas should have been closer to $5 a gallon 2 years ago. BUT, the .gov (which passed all the EPA regulations) hadn't thought all the way through to refinery production cost. Refineries are heavily subsidized by the .gov so that they are able to remain open for business. I know that the media is alway harping on the $70 billion that stateside oil companies receive in .gov subsidies every yaer. But, they don't tell the public that those subsidies keep gas prices down to $2.65/gallon when they should be closer to $6/gallon, like in the UK. The refineries can't keep up with the demand, the .gov can't subsidize them quick enough, prices keep going up.

What are the EPA regulations? for every acre of land that an oil refinery uses as its campus, several hundred acres must be preserved in area around the refinery, also the refinery must maintain the environment of that area. For every gallon of water used by a refinery, 1000 of gallons of water must be inspected by the refinery to ensure that they are not harming, or contaminating the surrounding environment. The EPA regulations were passed as a conservation minded bright idea, with no forethought to the cost. Subsidies paid by the .gov keep consumer cost down.

This whole thing can be related to the .gov laws that limit classroom sizes in schools. Every parent voted for classrooms to not exceed 30 students, which broke up classes, causing a need for more facilities, more teachers, more money. No one thought that far, and no one wants to pay for it.

It's political agenda and nothing else. "Give the people what they want" - so long as they keep voting for me - the rest is just details.
Link Posted: 8/19/2005 8:22:51 PM EDT

Originally Posted By otar:
Ok, wheres the BS flag when you need it.
Since when has it cost about $2.00 to make gas out of oil?
If thats the case, then every one was loosing money a year ago when gas was less than 2.00/gal?

Well there ARE other byproducts of the refining process that can be sold, not just gasoline comes from oil, so while it may cost $2.00 to refine it, you will have several useable products at the end.
Link Posted: 8/19/2005 8:25:06 PM EDT
Link Posted: 8/19/2005 8:28:02 PM EDT
[Last Edit: 8/19/2005 8:29:42 PM EDT by warlord]
I used to work for a petroleum company on the West Coast, and the govt would pass thru various laws mandating this and that. Making gasoline is not an easy thing to make, it involves temps of 900F and along hundreds of pounds of pressure. If you're not careful, BOOM! First the govt mandate MTBE, then come along and say no you can't. Refineraries don't modify themselves, to produce this type of gasoline etc. I know for a fact that one refinary in Calif had to do a $500 million dollar upgrade to make the new gasoline. The gasoline companies are not making gasoline for fun, so they pass along these costs.
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