NEWS RELEASE
April 18, 2006
CONTACT: Tim Hamilton (360) 495-4941, Jamie Court (310) 392-0522 ext 327, Judy Dugan, ext 305
New Gasoline Study Shows Profits, Not Crude Oil Prices Or Ethanol, Are Driving Pump Price Spike

Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights released a new study today of rising gasoline prices in California that found corporate markups and profiteering are responsible for spring price spikes, not rising crude costs or the national switchover to higher-cost ethanol, as the oil industry claims.

Click here to download and read the study. http://www.consumerwatchdog.org/energy/pr/?postId=6133


Independent petroleum consultant Tim Hamilton analyzed gasoline price increases from January to April to find that:

• Increases in the "spot" market price of crude oil -- which is the highest price a major oil company would pay for crude oil -- accounted for only 12 cents per gallon. California's percentage sales tax increased fuel prices by another four cents per gallon. More than 40 cents of the 60-cent increase in gasoline prices over 3 1/2 months is attributable to increased refinery and marketing profit margins for the oil companies;<
• Neither the MTBE phaseout nor the substitution of ethanol is a serious part of the increase. If the MTBE phaseout or ethanol blending specifically increased costs for oil companies in California, other states in the West using conventional unblended gasoline should be much less affected. Yet Washington State, which uses only conventional gasoline and has similar refinery capacity and crude oil sources, mirrored California's increase;<
• The profit increase of 42 cents, on top of record profits last year, means California gasoline will cost consumers approximately $546 million more in April 2006 than in April of last year.<

"While oil companies continue to blame crude oil prices and ethanol additives for the recent gasoline price spikes in California, the chief cause is increased profiteering by oil companies that have previously posted world record profits," said Hamilton.

"Oil companies are opportunistically using the rising world price for crude oil as an excuse to excessively raise gasoline prices and pump up their profits, even though the spot market price for crude has gone up far more slowly than gasoline prices," said FTCR President Jamie Court. "In addition, the spot price is higher than most oil companies pay, since they either harvest their own crude or pay more stable and often much lower contract prices. "This study should be a wake-up call for California voters who will vote in November on a ballot initiative to tax windfall profits by oil companies so the state can develop alternatives to the petroleum economy."

Let's face it, the oil co's are just ripping us off big time. Somebody sneezes in Iran, and the price of my gasoline goes up 40 cents....??? That's not right.....

I would have to disagree with the report based on what I see in Pennsylvania. I certainly can't speak for California, but here in central PA I see a strong correlation between spot market gasoline prices and pump prices. for instance:

Feb 7th (bought my HCH II then) - March spot gasoline - $1.60 - Pump price $2.25 (difference 65 cents)
Feb 14th - March spot gasoline $1.40 - Pump price $2.10 (difference 70 cents)
April 5th - May spot gasoline - $1.90 - Pump price $2.70 (difference 70 cents)
April 21st - May spot gasoline - $2.25 - pump price $2.96 (difference 71 cents)

As you can see - the data shows that for my little corner of the world - the pump price has very closely tracked the spot price of gasoline for the forward month's contract. It worked this way during the spikes around when the hurricanes hit last year too.

There is nothing in this data that makes me angry at any oil company (some NY or Chicago commodities traders and hedge fund speculators perhaps, but not the oil companies)

Eric

Your data are correct. If you look at gasoline futures, the price at the pump correlates with that price almost to the penny when you figure in state/fed taxes. My beef is that the oil co's are raking us over the coals and treating oil like an investment. Just look at the profit some have made last year.....$100's of billions, up over 100% from prev years???? Is that right? maybe so in our free market society. If I own a gas station and just bought a load of fuel for $2 a gal, then that fuel should be sold at its original price until the tank is dry. Then the next load, if its higher or lower in price, should be reflected in the pricing. But they treat oil/fuel as a trading commodity like gold. If I own a 24K gold chain and its 2 oz of pure gold then its worth x dollars today. If the price of gold goes up or down tomorrow, its worth x+/- dollars tomorrow.....that I can live with.. But are station owners and oil co's dealing in a commodity and trading it like an investment or a fixed item with a fixed price????? If that's the case, why don't we all get into the gasoline futures market and buy and sell for our own benefit??? If I score a good price on 100 gal of reg unleaded for May, they deliver it to my local dealer and I pump it at my own price with some sort of special credit card system and I pay the dealer a small percentage for handling the stuff for me.......just like the stock market.....

Gasoline prices in Beverly Hills, CA

http://news.yahoo.com/news?tmpl=stor.../la11304202125