FOR IMMEDIATE RELEASE
Wednesday, May 19, 2004
Adam Goldberg, CU, (202) 462-6262
Mark Cooper, CFA, (301) 384-2204
Investigation of Oil Industry, More Efforts to Increase Production and Supplies
Groups Ask President Bush to Investigate Oil Industry Practices;
Web Site Allows Consumers to Send Free Letter to President
(Washington, D.C.) – Citing the growing frustration over skyrocketing gas prices, consumer groups today called on consumers throughout the nation to join them in asking President Bush to investigate the behavior of oil and gas companies and stop further industry mergers that could result in even higher prices at the pump.
Consumers Union and Consumer Federation of America have asked the President to conduct an investigation into the practices of domestic oil companies in driving gas prices higher; require increased refinery capacity to increase production; and require oil companies to keep more gasoline in storage so they can quickly respond to any problems that might further raise prices.
Consumers Union has set up a special action on its Web site, www.consumersunion.org, where consumers can send a free e-mail letter to the President and the Federal Trade Commission to look into the practices of domestic oil companies. A copy of the groups’ letter to the President also can be found at the Web site click here.
“Now that gas has topped $2 a gallon on average, there is a lot of blame being tossed around for these higher prices, including OPEC, environmental regulations and increased consumer demand. But we believe there’s not enough focus on domestic oil companies and what they’ve done to drive prices higher,” said Adam Goldberg, policy analyst with Consumers Union, publisher of Consumer Reports.
A study of gas prices put out last week by CU and CFA found that the oil industry is raising prices faster than its actual costs go up, and when costs go down, prices at the pump don’t follow. Because competition has dwindled in the industry – in the 1990s, mergers turned 34 major oil companies into 13, and 15 refining companies into seven – there is much less incentive to bring prices at the pump down to reasonable levels.
“The energy legislation pending before Congress will not provide relief,” said Mark Cooper, CFA’s director of research. “Our study found that oil companies have increased their profits by about $100 billion in the past four years, so throwing billions of dollars of subsidies at the industry makes little sense.”
“This lack of competition help leads to higher prices at the pump, and the President needs to find ways to change the industry’s behavior as well as prevent any more mergers that could lead to consumers paying even more,” Goldberg added.