Oil Price Gouging-oil company profits double, but no federal laws define price gouging

Yesterday it was reported that the FTC ruled oil companies didn’t manipulate the market after Hurricane Katrina.

Jamie Court, the president of the Foundation for Taxpayer and Consumer Rights doesn’t think that tells the whole story. On the foundation’s website Court said the commission didn’t study broader questions of why U.S. demand for gas has risen 30 percent, while supply is up 10 percent. “Seems you’d want to keep up with demand unless you want to make more money,’’ he said of the oil companies.

Court also shared some thoughts in on National Public Radio’s Marketplace.

What does a gallon of gasoline really cost to make anyway? No one knows exactly. But oil companies’ recent profit reports tell us it’s a whole lot less than what we’re being charged at the pump.

That’s how Exxon Mobil took home more than $8.4 billion in the first quarter and Chevron doubled its profits to $4 billion.

You see, big oil companies say the price of their raw material — crude — is skyrocketing.

In reality, Exxon and Chevron make piles of money both from selling their crude oil and from refining that oil into gasoline.

Refiners like Exxon almost never pay the high crude prices they complain about. That’s because when refiners aren’t using their own crude, they have long-term contracts at cheaper-than-market prices.

And that’s why profits from Chevron’s refineries jumped 260 percent in the same quarter.

Court also had some ideas for ways legislators and regulators could go after price gouging.

When it comes to price gouging, there are no federal laws.

States say you can only prosecute for gouging under two conditions. First, there has to be a state of emergency. And next, gas prices have to go up by at least 10 percent when the cost of supplies doesn’t justify it.

With outrageous gasoline prices sucking the life out of the economy, why doesn’t the federal government apply the same state standard for price gouging prosecutions all the time, not just during emergencies?

Posted in Government, Oil. Comments Off on Oil Price Gouging-oil company profits double, but no federal laws define price gouging