Gas Prices Rise, Big Oil Lies

In case you hadn't noticed, it's gotten more expensive lately to fill up your gas tank. The average price for a gallon of gas is hovering at just under three dollars, the highest it's been since the weeks immediately following Hurricane Katrina. This time however, the price didn't spike by fifty-cents-per-gallon in a matter of days. It's taken a much slower track up, and people don't seem quite so stunned. After all, higher gas prices leading up to Memorial Day are an annual occurrence and drivers seem willing to pay.

So what's causing the high prices? The price for barrel of crude reached a record high on Monday of $70.40. But why? Hurricane Katrina rattled the oil markets and sent the price of oil to previously unseen heights as supply lines were disrupted and offshore oil rigs were knocked out of commission. But there haven't been any hurricanes lately. There has, however, been a lot of talk about nuclear war in the Middle East, which has certainly startled the speculators. And it can't be ignored that it's awfully hard to convince those who control the oil to lower the price when they know there are more than enough consumers willing to pay said price.

But if you're to hear the oil companies tell it, high gas prices ought to be blamed on environmentalists and government regulators, not their record profits. The Center for American Progress takes a look at some of these excuses in the latest Progress Report.

Last week, as members of Congress returned home for spring recess, Big Oil took the opportunity to pass along some misinformation about why it is not responsible for the high gas prices. In a letter circulated to every member of Congress, the American Petroleum Institute (the oil industry's main lobbying group) blamed current prices on ethanol. The gist of its argument: last year's energy bill ended an "oxygenate requirement" (oxygenates are fuel additives"that contain oxygen which can boost gasoline's octane quality, enhance combustion, and reduce exhaust emissions"). The oil industry had previously relied on a noxious chemical called MTBE to oxygenate its fuel. According to the letter, the end of the oxygenate requirement was "leading to the phase-out of MTBE" and the phase-in of ethanol. "While refiners are working day and night to meet this requirement," Big Oil told Congress, "they face complicated challenges in switching to ethanol, which has numerous logistical difficulties in its transport," and which is "currently more expensive than gasoline."

Of course, lying and shifting blame is nothing new to petroleum industry. In the latest issue of Vanity Fair, Mark Hertsgaard examines the ways in which Big Oil has used tactics picked up from the tobacco industry to wage a war on the science of global warming. It's a small section of a much larger article on the realities of the problem and I would highly recommend reading it over online or in print.

Al Gore and others have said, but generally without offering evidence, that the people who deny the dangers of climate change are like the tobacco executives who denied the dangers of smoking. The example of Frederick Seitz, described here in full for the first time, shows that the two camps overlap in ways that are quite literal--and lucrative. Seitz earned approximately $585,000 for his consulting work for R. J. Reynolds, according to company documents unearthed by researchers for the Greenpeace Web site and confirmed by Seitz. Meanwhile, during the years he consulted for Reynolds, Seitz continued to draw a salary as president emeritus at Rockefeller University, an institution founded in 1901 and subsidized with profits from Standard Oil, the predecessor corporation of ExxonMobil.

Seitz was the highest-ranking scientist among a band of doubters who, beginning in the early 1990s, resolutely disputed suggestions that climate change was a real and present danger. As a former president of the National Academy of Sciences (from 1962 to 1969) and a winner of the National Medal of Science, Seitz gave such objections instant credibility. Richard Lindzen, a professor of meteorology at M.I.T., was another high-profile scientist who consistently denigrated the case for global warming. But most of the public argument was carried by lesser scientists and, above all, by lobbyists and paid spokesmen for the Global Climate Coalition. Created and funded by the energy and auto industries, the Coalition spent millions of dollars spreading the message that global warming was an uncertain threat. Journalist Ross Gelbspan exposed the corporate campaign in his 1997 book, The Heat Is On, which quoted a 1991 strategy memo: the goal was to "reposition global warming as theory rather than fact."

The campaign to avoid responsibility for high gas prices is much like the campaign to avoid responsibility for global warming. Big Oil pays off an army of think tanks like Heritage and AEI to tell the public that big, bad environmentalists and consumer advocates are to blame for not letting them build more refineries. And to be sure, more refineries could indeed mean cheaper gas. But it's Big Oil that's been keeping its refinery capacity down, not activists.

The Foundation for Taxpayer and Consumer Rights has a handful of internal memos from Texaco, Chevron, and Mobil, all dated from the 1990s, detailing company plans to purposely reduce refining capacity to raise profits. The plan worked. From 1999 to 2004, American refiners increased their profits by a whopping 80%, from nearly $0.23 to $0.41 per gallon of gasoline. From the beginning of 1999 to the end of 2004, the retail price of gasoline went from about $0.98 to $1.84 per gallon.

The answer to this problem is not so simple as buying gas from BP or Hess instead of Texaco or Exxon. Even the gas sold by your local non-franchise gas station likely comes from a major refiner. Big Oil is an entrenched part of life in America. However, it's important to recognize that gas prices are not just abstract numbers with no basis in any sort of science or economics that you can comprehend. And reducing personal dependency on fossil fuels -- carpooling, vanpooling, using transit, cycling, walking, driving a hybrid or alternative fuel vehicle -- is a real way of showing Big Oil that you're not simply at the mercy of their market. It also doesn't hurt that it will save you some money in the process.

There's more...


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