The Facts on Rising Fuel Prices

National Geographic Photo
from Daimler Chryslers firehouse:

Here we go again. Just as the weather warms and Americans are turning their thoughts to hitting the roads for vacations or weekend getaways, the prices of gasoline and diesel fuel are rising faster than the odds of the Detroit Lions playing the Super Bowl.
It’s a “coincidence” that has nothing to do with chance, but almost everything to do with greed by the big oil companies.
Despite a documented history of blowing their exorbitant profits on outlandish executive salaries and stock buybacks, and hoarding their bounty by avoiding technologies, policies and legislation that would protect the population and environment and lower fuel costs, Big Oil insists on transferring all of that responsibility on the auto companies.

Yes, even though the automakers have spent billions developing cleaner, more efficient technologies such as high-feature engines, hybrid powertrains, multi-displacement systems, flexible fuel vehicles, and fuel cells, Big Oil would rather fill the pockets of its executives and shareholders, rather than spend sufficient amounts to reduce the price of fuel, letting consumers, during tough economic times, pick up the tab.

Where’s the proof? Put on your reading glasses, because there’s plenty.

*In 2005, according to its financial report, ExxonMobil earned $36.1 billion, up $11 billion from 2004. Yet the oil giant isn’t going to waste any of that dough on developing alternative fuels or significantly increase the amount of money it spends to find oil or refine it into gasoline, which would help boost supplies and raise prices. The company’s own literature states, “current renewable technologies do not offer near-term promise for profitable investment relative to attractive opportunities that we see in our core business.”
Last December 20, the Wall Street Journal reported that spikes in oil prices were due to “Big Oil’s emphasis on profits over finding oil.”
In fact, Big Oil vehemently opposed the renewable energy standard included in the U.S. Energy Policy Act of 2005. A Renewable Fuels Standard requires that a certain percentage of motor fuel in the U.S. must be obtained from renewable sources, such as ethanol or biodiesel. The auto industry strongly supported the Renewable Fuels Standard which will go a long way toward vastly reducing our dependency on imported oil. It will also boost employment in our country by an estimated 200,000 jobs by energizing the ethanol-producing industry and agriculture.

*Big Oil has repeatedly used the tragedy of Hurricane Katrina as a convenient excuse for sidestepping their responsibilities. Despite record 2005 profits, ExxonMobil, ChevronTexaco and other oil giants have sought to delay national standards to lower sulfur content in fuels, pleading “Katrina relief.” Big Oil wants a regional, rather than national approach to the issue, which would allow it to drag its feet on compliance. A national standard is needed because the advanced technologies we put into the vehicles depend on clean, low-sulfur fuel. The low emission vehicles of the next decade will be at what the industry calls “99 percent control level,” which means there’s not much more we can do through technology without cleaner fuels.

* Indeed, gas station owners accused ExxonMobil in particular for price gouging the wake of Katrina. The Federal Trade Commission is now investigating.
While Americans showed their generosity to Katrina victims by donating $500 million toward relief efforts, the four largest oil companies came up with relative pennies–$11 million total! Nevermind that ChevronTexaco facilities leaked six million gallons of oil into pristine Gulf wetlands in Katrina’s aftermath–one of the largest oil spills in U.S. history.

*Katrina certainly took its toll on refineries, knocking several out of commission, but it’s clear Big Oil has taken little action to shore up its capacity. According to an editorial in the Sept. 2, 2005 edition of the Washington Times, no new refineries have been built in a quarter century. “Yes, existing refineries have undergone significant expansion over the years as others have been shuttered,” the editorial said, “but many of them are more than 30 years old. Already operating near total capacity before Katrina, the aging refinery infrastructure left little margin for error. Katrina, needless to say, obliterated that margin and then much more. Now we are paying the price, which, appropriately enough, has reflected itself in soaring gasoline prices around the nation.”

*In December, ExxonMobil and BP were charged by Alaskan authorities with conspiring to withhold natural gas from U.S. markets by putting their heads together to slow the flow of the fuel to drive up prices, as we said.

*ExxonMobil had the gall to say in a recent print ads “Every form of transportation–planes, trains and automobiles–now benefits from improved fuels and engine systems. So why is that despite this overall progress, the average fuel economy of American cars is unchanged in two decades?”

That would be powerful–if it were true. According to the EPA’s latest figures, 2005 model year vehicles averaged 21 miles per gallon–the “highest since 1996.” In 1975, average fuel economy was just 13.1 miles per gallon.

The auto industry is doing its job by building cleaner, leaner, more efficient vehicles and embracing alternatives to gasoline such as biodiesel and ethanol and hybrids.
So while we make these important and responsible strides despite the challenges of global competition and legacy costs, Big Oil is swimming in profits, content to let the nation’s drivers drown in rising prices, every time they fill up.