A California license plate seen recently that said, “Gas Pain,” might be the sly joke of a gastroenterologist, but it’s not on a Mercedes. So let’s stipulate that it means pain at the pump, with a gallon of regular gas stuck for months  at around $4.40. This kind of price is as usual fueled by investor speculation and an oil industry that cuts supply to drive up profit. But the license plate could just as well be about a different kind of gas-a  big increase in greenhouse gas emissions by the state’s oil refineries.

A California license plate seen recently that said, “Gas Pain,” might be the sly joke of a gastroenterologist, but it’s not on a Mercedes. So let’s stipulate that it means pain at the pump, with a gallon of regular gas stuck for months  at around $4.40. This kind of price is as usual fueled by investor speculation and an oil industry that cuts supply to drive up profit. But the license plate could just as well be about a different kind of gas-a  big increase in greenhouse gas emissions by the state’s oil refineries.

California refineries “emit 19-33% more greenhouse gases (GHG) per  barrel [of crude oil] refined than those in any other major U.S.  refining region,” according to a recent report for  the Union of Concerned Scientists. The reason is a corresponding increase in the amount of heavier, dirtier crude oil processed,  including dark, sticky tar sands oil from Canada. The gasoline produced at the end of the process is no dirtier-but the gases that could otherwise come from your tailpipe are going up the refinery smokestack instead.

A story in Inside Climate Today points  to requirements that refiners remove sulfur pollutants from gasoline and diesel fuels. Such scrubbing is harder to do with the cheaper, dirtier tar oil, and refiners may emit more carbon pollutants during a longer refining process, especially as they try to squeeze out more fuel from every barrel of oil.

California isn’t yet capping refiinery pollution, and this week delayed putting financial teeth in planned emission caps. Pardon us for thinking oil industry lobbying could have had something to do with it.

No one is forcing refiners to buy Canadian tar oil-refiners want because it’s cheaper than lighter oils and produces a bigger profit.  It’s the same reason oil companies are demanding their high-volume Keystone XL pipeline from Canada to Texas, which could make California  refinery pollution look like a clear day in spring. Exxon Mobil officials won’t even admit that the tar oil is dirtier to refine. From a Texas story on the pipeline:

An ExxonMobil spokesperson refused to specify how much heavy crude the company’s refineries are already processing in Texas or might process if the pipeline is completed. Nor would the company respond to questions about how refining tar sands oil affects the amount of air pollution created by the plants.

Extra profit also comes from U.S. refiners exporting gasoline and diesel fuel at record rates. Fuel is now America’s top export, even as refiners import the dirtiest oil to make it.  Domestic pump prices go up and the refinery pollution burden on Americans goes up while other nations reap the clean fuel.

Californians are already buying and driving cleaner cars and cutting consumption. All families prize clean air, but those who live near  refineries are suffering more, not less, pollution. There’s “gas pain” for everyone except the oil industry and its servants in government, as in a Congress that won’t even trim the industry’s billions in corporate welfare.

—————

Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

U.S. gas prices have hit their highest level ever for springtime, at $3.96 a gallon for regular on average. Yep, higher even than the record surge in 2008, as oil companies reap near-record profits. So what does that have to do with the price of silver?

U.S. gas prices have hit their highest level ever for springtime, at $3.96 a gallon for regular on average. Yep, higher even than the record surge in 2008, as oil companies reap near-record profits. So what does that have to do with the price of silver?

The speculative price of silver is dropping, maybe crashing, from its high around $50 an ounce largely because of one move: the New York Mercantile Exchange, where silver is traded, increased how much of the price of a trade has to be paid up front. Instead of a few cents on the dollar, it’s now several cents on the dollar.

Oil futures are sold even more cheaply–with speculators still putting up only around 6 cents on the dollar to trade hundreds or thousands of barrels of oil. That makes it too easy to gamble and encourages trades that are intended to push the price up further, to the detriment of your personal wallet. Just as with silver, most of the traders don’t produce oil and never intend to take delivery of a barrel of oil on their Manhattan doorsteps. Just as with silver, oil is attractive to speculators looking for a commodity that’s protected from any drop in the value of the dollar–even if their activity ends up hurting the value of the dollar, as shown in a 2009 Rice University study on energy speculation.

There are some differences, including the fact that oil markets are too vast to be cornered by one or a few traders, unlike silver. But the similarities are more numerous.

So why not raise the margin–the amount that pure speculators have to pay up front–on oil futures trading? Sens. Bill Nelson of Florida and Maria Cantwell of Washington recently asked the Commodity Futures Trading Commission to do just that–and quickly. But the CFTC hasn’t lifted a finger and won’t even comment on the Nelson letter–which is evidence of the power of the financial industry’s lobbying power in Washington.

The White House appoints the members of the CFTC. If its chairman, Obama appointee Gary Gensler, won’t exercise his power to protect consumers and the economy, President Obama should be all over him.

If you’re interested in raising the price of speculation to lower the price of gasoline, why not give the president a call and tell him to give the CFTC a kick in the pants? White House e-mail is here (put “oil speculation”) in the subject line).  Comment line is 202-456-1111, and live switchboard is 202-456-1414. Every call is logged.

———-

Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

It’s as though we had another Hurricane Katrina furiously driving up the price of fuel, but without the storm. Which makes it interesting that an indie documentary called “Gas Hole,” (trailer), examining the reasons for our high gas prices in the post-Katrina world and oil company influence on the gas-guzzling engines in our cars, is now getting wider release. You can be sure that Exxon didn’t provide the funding for this funny/weird/disturbing doc. (I love the old desert-rat types with faded sedans that get 100 mpg, and their stories of disappearing clean-car patents.)

The national average price of plain old regular gasoline is up a dollar a gallon over the past week to $3.83, according to AAA. California, which alerts the rest of the nation to where pump prices are going, is at $4.20. And nationwide, the diesel fuel that drives our trucks and trains is $4.14 a gallon, even though diesel is cheaper to make than gasoline. No wonder food prices are spiking.

It’s as though we had another Hurricane Katrina furiously driving up the price of fuel, but without the storm. Which makes it interesting that an indie documentary called “Gas Hole,” (trailer), examining the reasons for our high gas prices in the post-Katrina world and oil company influence on the gas-guzzling engines in our cars, is now getting wider release. You can be sure that Exxon didn’t provide the funding for this funny/weird/disturbing doc. (I love the old desert-rat types with faded sedans that get 100 mpg, and their stories of disappearing clean-car patents.)

We find out why there’s no supply and demand in any real sense driving the price of gas today. Oil prices are spiked upward by speculation in futures markets, not by physical shortage on the market. Gasoline is driven upward not just by oil prices, but by refining companies’ restrictions on their output, and overall supplies. Then the price of gasoline pushes up oil prices some more. We’re all at the mercy of greed, not supply and demand.

Some of the serious points covered in “Gas Hole” track OilWatchdog’s studies and reports over the years, which are covered in my colleague Jamie Court’s book, “The Progressive’s Guide to Raising Hell.” (video). (Full disclosure: Jamie was interviewed for the movie.)

Some of the most eye-opening points from the book:

Remarkably, the idea that oil companies have control over the price at the pump is controversial in Washington, D.C. Oil company executives point to geopolitical instability, future predictions of crude oil scarcity, OPEC, and other forces beyond their control as the culprits.

The public knows the scoop, and its instincts track the research. Oil companies know they can make more money by making less gasoline, so they do.

I have studied the issue of high gasoline prices for more than a decade.

Here’s what I have learned about how the big five oil companies control gasoline prices by making the commodity scarce and keeping the price high. This knowledge is critical to opposing the industry’s anticonsumer behavior and pushing Americans toward real energy change.

• Rather than compete with each other to provide more and cheaper gasoline, oil companies cheat together to withhold needed gasoline supply from the market. Consistently, the companies artificially pull back refinery production of gasoline in order to reduce supply coming in during periods of peak demand so they can increase prices. … This behavior has been documented by government agencies like the Federal Trade Commission, which found, for example, in an investigation of Midwest gasoline price spikes, that one refiner admitted keeping supply out of a region in need because it would boost prices.

• Oil companies failed to build ample refining capacity to meet demand. Over the last twenty years,America’s demand for gasoline increased 30 percent and refinery capacity at existing refineries increased only 10 percent. No new American refinery has come on line during the last thirty years. Internal memos and documents from the big oil companies show they deliberately shut down refining capacity in order to have a greater command over the market.

• The big oil companies have their own crude oil production operations and control substantial foreign production of crude oil. They profit wildly when the price of crude oil skyrockets, so they have an interest in driving up the price, despite the fact that they blame OPEC for those crude oil increases.The crude oil producers can even drive up the price of crude by restricting gasoline production and trading crude oil among their own subsidiaries to drive up the price paid for crude by others. Traders with connections to the oil companies can also make big bets on the opaque crude oil futures market to drive up the price and also drive up the value of their Exxon shares.

• The crude oil that big integrated oil companies use in their own refineries is mostly bought on long-term contracts or through their own production, so the oil companies don’t pay the world price for crude oil when it’s high. Their raw material costs are much lower than they would like us to believe. So when the companies raise the price of gasoline in tandem with the run-up in crude oil prices, they are making big profits because Exxon’s crude oil unit is charging its own refining unit a higher price for crude than is necessary.The accounting shenanigans result in an overall windfall profit but show the companies’ gasoline refineries making little profit.

“Gas Hole” also pays close attention to oil companies’ long history of influencing markets and government to boost their profits and protect their business model. It pays impressive tribute to the inventor of modern investigative reporting (and one of my personal heroes), Ida Tarbell, whose 1904 history of Standard Oil laid bare a price-fixing national monopoly with tentacles everywhere in government.

Gee, does that sound familiar today? “Gas Hole” has too much sense of the absurd–even a clip from “Reefer Madness”–to be pedantic. But knowledge is power. In the end, it’s a lot more useful than boycotting the Exxon station.

—————–

Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

If you want to know why we're really paying over $4 per gallon for gasoline, and there appears to be no end in sight, the film Gas Hole lays it all out for anyone who wants to know the history of the pain at the pump.

The filmmakers pull back the curtain on the dirtiest secrets of the oil industry: from oil companies buying up patents for devices that would give you 100 miles per gallon, to intimidation of inventors of green technology, to oil company manipulation of the gasoline supply that drives up prices.

Being released on DVD in time for Earth Day, Gas Hole, narrated by Peter Gallagher and featuring Joshua Jackson, is an eye-opening documentary about the history of oil prices and sheds light on a secret that the big oil companies don't want you to know — that there are viable and affordable alternatives to petroleum fuel!

Gas Hole provides a detailed examination of our continued dependence on foreign oil and examines various potential solution.

The film also tells the story of the battle my group, Consumer Watchdog, fought with Shell Oil to keep the company from demolishing a key gasoline refinery during a period of high demand and low supply in order to drive up the price at the pump. A combination of public pressure and intervention by US Senator Barbara Boxer and then California Attorney General Bill Lockyer forced Shell to keep the refinery open and sell it to a competitor.

As Gas Hole documents, it took every bit of raising hell know-how we had to keep Shell honest. Most communities just cannot fight back.

The film artfully lays out what I learned about fighting oil companies for more than a decade about how they jack up the price up at the pump.

• Rather than compete with each other to provide cheaper gasoline, oil companies cheat together to withhold needed gasoline supply from the market. Consistently, the companies artificially pull back refinery production of gasoline in order to reduce supply coming in during periods of peak demand so they can increase prices.

• Oil companies failed to build ample refining capacity to meet demand. Over the last 20 years, America's demand for gasoline increased 30 percent and refinery capacity at existing refineries increased only 10 percent. No new American refinery has come on line during the last 30 years. Internal memos and documents from the big oil companies show they deliberately shut down refining capacity in order to have a greater command over the market.

• The big oil companies have their own crude oil production operations and control substantial foreign production of crude oil. They profit wildly when the price of crude oil skyrockets, so they have an interest in driving up the price, despite the fact that they blame OPEC for those crude oil increases. The crude oil producers can even drive up the price of crude by restricting gasoline production and trading crude oil among their own subsidiaries to drive up the price paid for crude by others. Traders with connections to the oil companies can also make big bets on the opaque crude oil futures market to drive up the price and also drive up the value of their Exxon shares.

• The crude oil that big integrated oil companies use in their own refineries is mostly bought on long-term contracts or through their own production, so the oil companies don't pay the world price for crude oil when it's high. Their raw material costs are much lower than they would like us to believe. So when the companies raise the price of gasoline in tandem with the run-up in crude oil prices, they are making big profits because Exxon's crude oil unit is charging its own refining unit a higher price for crude than is necessary. The accounting shenanigans result in an overall windfall profit but show the companies' gasoline refineries making little profit, and "upstream" crude-oil production divisions making the lion's share.

The oil companies cannot be shamed, but Gas Hole shows why we need to keep them on a short regulatory string.

What are the solutions? Gas Hole offers them up starting with claims of buried technology that dramatically improves gas mileage, to navigating bureaucratic governmental roadblocks, to evaluating different alternative fuels that are technologically available now, to questioning the American Consumers' reluctance to embrace alternatives.

If you are paying $4 dollars or more per gallon for gasoline, spending a little more on the DVD of Gas Hole is a wise choice.

—————–

Jamie Court is the president of Consumer Watchdog and author of The Progressive's Guide To Raising Hell (Chelsea Green)

Follow Jamie Court on Twitter: www.twitter.com/RaisingHellNow

While skirmishes in Libya and uncertainty in the Middle East are nice cover for outrageous gasoline prices, the fact is the same old suspects are making a killing from sky-high gas prices approaching $4 dollars per gallon in California: big oil companies and greedy speculators.

While skirmishes in Libya and uncertainty in the Middle East are nice cover for outrageous gasoline prices, the fact is the same old suspects are making a killing from sky-high gas prices approaching $4 dollars per gallon in California: big oil companies and greedy speculators.

The speculative market may have driven crude oil prices up, but that’s not the price oil companies pay for the crude oil that goes into our gasoline. America’s big oil companies use crude oil that they have harvested from the ground or bought much cheaper through long term contracts to refine into gasoline. You’ll see the results in next quarter’s profit statements: big profits from both crude oil sales and refineries that make gasoline, what’s called “upstream’ and “downstream” operations in profit reports.

Consumer Watchdog has for years both tried to curb the opaqueness of the volatile speculative market for oil and to regulate supplies at gasoline refineries because oil companies game both systems, creating artificial shortages in the markets to jack up prices or exploiting historical events to justify obscene profits.  Today’s sky high gasoline prices are the result of oil companies shutting down refineries and playing the speculative markets for big gains.

The deafening silence from the White House and groups in DC loyal to the President who know better is the most astonishing thing.

Obama campaigned against oil company greed on the campaign trail but now he seems to have lost his voice on the subject. Republicans are taking the offensive, but the oil industry that has been nourished in their bosoms for decades is at the heart of the crisis. Oil companies have kept the nation running on such short supplies of gasoline that any jolt to the system sends gas prices through the roof and makes the economy pay.

What follows is the five facts of life I have learned from more than a decade fighting oil companies, battles I recount in my new book The Progressive’s Guide To Raising Hell. It’s about time the White House started educating Americans about these facts of life and fighting back against the real perpetrators of the pain at the pump.

• Rather than compete with each other to provide more cheaper gasoline, oil companies cheat together to withhold needed gasoline supply from the market. Consistently, the companies artificially pull back refinery production of gasoline in order to reduce supply coming in during periods of peak demand so they can increase prices. It’s legal so long as there is no smoky back room where they talk about it, but they don’t need to since industry data about supply flows freely on corporate computer screens. This behavior has been documented by government agencies like the Federal Trade Commission, which found, for example, in an investigation of Midwest gasoline price spikes, that one refiner admitted keeping supply out of a region in need because it would boost prices.

• Oil companies failed to build ample refining capacity to meet demand. Over the last twenty years, America’s demand for gasoline increased 30 percent and refinery capacity at existing refineries increased only 10 percent. No new American refinery has come on line during the last thirty years. Internal memos and documents from the big oil companies show they deliberately shut down refining capacity in order to have a greater command over the market.

• The big oil companies have their own crude oil production operations and control substantial foreign production of crude oil. They profit wildly when the price of crude oil skyrockets, so they have an interest in driving up the price, despite the fact that they blame OPEC for those crude oil increases. The crude oil producers can even drive up the price of crude by restricting gasoline production and trading crude oil among their own subsidiaries to drive up the price paid for crude by others. Traders with connections to the oil companies can also make big bets on the opaque crude oil futures market to drive up the price and also drive up the value of their Exxon shares.

• The crude oil that big integrated oil companies use in their own refineries is mostly bought on long-term contracts or through their own production, so the oil companies don’t pay the world price for crude oil when it’s high. Their raw material costs are much lower than they would like us to believe. So when the companies raise the price of gasoline in tandem with the run-up in crude oil prices, they are making big profits because Exxon’s crude oil unit is charging its own refining unit a higher price for crude than is necessary. The accounting shenanigans result in an overall windfall profit but show the companies’ gasoline refineries making little profit, and “upstream” crude-oil production divisions making the lion’s share.

————-

Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.