posted September 09, 2005 07:05 PM              

That point echoed testimony by an attorney for the Federal Trade Commission before a U.S. House committee.

"In essence, companies with exploration and production operations now find themselves in a position analogous to that of a homeowner who bought a house in a popular area just before increased demand for housing caused real estate prices to escalate," FTC Associate General Counsel for Energy John H. Seesel testified before House Energy and Commerce Committee earlier this week.

"Like the homeowner, crude oil producers can charge higher prices due to increased demand. If high prices and high profits are expected to continue, they may draw greater investments over time into the oil industry ... likely to elicit more crude supply, which would exert a downward pressure on prices."

That spurt to $3.19 and beyond for a gallon of unleaded regular may have ended. A drop in wholesale prices was credited for McKeesport-based Mon Valley Petroleum's decision to lower rates to $2.99 a gallon at its 20 Buy 'n Fly convenience stores Wednesday.

"Everyone is questioning us," MVP Vice President and General Manager Don Bowers said. "We were getting price changes two and three times a day. The normal rule is, the major oil companies change at midnight, the unbranded change at 6 o'clock at night. But we haven't had anything normal yet this year."

In much the same way as a blame game is being played in respect to Katrina's wrath, so it seems that everyone - and no one - is to blame for rising prices at the pump. Attorneys general in 23 states think the truth is somewhere in between and are investigating allegations of price gouging.

"Hurricane Katrina was an event totally outside human control," Pennsylvania Attorney General Tom Corbett said. "We want to determine if storm-related factors were the only things responsible for this sudden and dramatic jump of prices at the gas pump."

So do members of the General Assembly in Harrisburg.

"'Trickle down' economics always works when disadvantage is to be passed along," Senate Minority Whip Michael A. O'Pake, D-Reading, wrote to Senate Consumer Protection and Professional Licensure Chairman Robert Tomlinson, R-Bensalem.

American Petroleum Institute, a trade association for more than 400 oil and natural gas businesses, sees a legal market at work, with no evidence of price fixing or collusion.

"We obviously have had a reduction in the ability to produce gasoline," API's Planting said. "And the market is at work. You can see it at wholesale, (and) you can see it in retail."

API cites Federal Trade Commission monitors of gasoline pricing as proof.

"The commission's experience from its past investigations and the current monitoring initiative indicate that unusual movements in gasoline prices typically have a natural cause," FTC's Seesel testified.

In a footnote to that testimony, Seesel said, "The higher prices in 2005 appear to be the result of market factors that have uniformly affected the entire country. At least for the part of this year that preceded Hurricane Katrina, the FTC's Gasoline Price Monitoring Project has detected no evidence of significant unusual local or regional pricing anywhere in the United States during this summer driving season."

In retail, companies don't get much return on the investment made in a wholesale shipment.

"The profit is between 5 and 10 cents depending on what kind of gasoline we get," MVP's Bowers said.

A point Bowers has made since the price spurt began is that the profit gets sliced by other hands in the till, including traders who press for higher gasoline prices on the commodities market.

"On Wall Street, in one day last week, they went up 25 cents a gallon," he said. "They shut down the market for five minutes for a cooling off period, and within five minutes it was up another 23 cents. By the end of the day it was up 47 cents a gallon.

"What would happen if beef or coffee beans or sugar went up like that? But we're letting it happen."

Also, there are the companies that offer consumers an alternative way to pay for fuel.

"Our credit card fees are up to 10 cents per gallon," Bowers said. "We need that, plus whatever else we can get. We typically work on somewhere around 8-9 cents (profit) per gallon.

"We count on you going inside and buying Popsicles. If you don't go inside we generally lose money on you. We're not making it on the gasoline."

Also, there are environmental factors - creating, API officials said, the requirement of "boutique fuels" with local-specific formulas that cannot be shifted across a nearby state line - and the taxman.

"State and local taxes can be a significant component of the final price of gasoline," FTC's Seesel said. "In 2004, the average sales tax was 22.5 cents per gallon, with the highest state tax at 33.4 cents per gallon (in New York)."

Pennsylvania charges 30 cents per gallon of gasoline, 36.4 cents per gallon of diesel.

In Pennsylvania, Corbett's Bureau of Consumer Protection offers an online complaint form at attorneygeneral.gov/ppd/bcp/gasprices.cfm for those who believe someone took unfair advantage of circumstances to hike the price of gasoline. Consumers also can call the bureau at 800-441-2555.

posted October 13, 2005 03:20 AM            

http://www.prisonplanet.com/archives/peak_oil/index.htm

It just p***** me off!

Sorry about the little outburst, but that's the way I feel.