Gasoline Brushing $4.00 is Breaking Point for Consumers Hit by Flat Wages, Job Losses

Government Must Speed Market Regulation, Says Consumer Watchdog; Group Calls for Stiffer Oil Trading Rules and Oversight of Refineries

SANTA MONICA, Calif., June 2 /PRNewswire-USNewswire/ -- The national average price for gasoline rose another four cents this week to $3.97 a gallon for regular, even as oil prices stayed at about $8 a barrel below the top prices hit last month. A continued spike in the price of gasoline and diesel ($4.707 a gallon) is a spiraling burden on working and middle-class Americans, said Consumer Watchdog.

"If oil drops by $8, which comes to 19 cents a gallon, consumers deserve to see results at the corner gas station," said Judy Dugan, research director of Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights). "Drivers are stretched to the limit by the economic downturn and can't wait for refineries to refill their coffers. For truck drivers, that goes double, with diesel priced at more than 70 cents a gallon above gasoline."

Much of the price difference between gasoline and diesel is already pure refinery profit, noted Consumer Watchdog.

Government is waking up to the urgency of energy market oversight, with an investigation in progress and regulation in the wings, but it won't help consumers or the economy if oil companies just shift their profit focus to gasoline, said Consumer Watchdog. The group urged Congress and the White House to agree on new oversight of refining operations as well. Its recommendations include requirements for:

-- Transparent reporting of refinery costs and profit.
-- Increased gasoline supply on hand to dampen price spikes.
Historically, gasoline refiners and marketers held about a 30-day
national supply of gasoline, but in recent years the supply has
averaged 22 days, making prices more vulnerable to any shift in
refinery output, either deliberate or accidental.

As for oil trading, an urgent Congressional measure to close what's called the "Enron Loophole" and add regulation to currently unregulated oil trading markets is still stuck in the farm bill. The huge omnibus bill was returned to Congress to fix an error in the version that President Bush vetoed last month. Now the repaired bill has to be passed by the House and Senate again, Bush has vowed to veto it again, and then the House and Senate must override the veto.

"President Bush should skip the drama and delay of another useless veto and sign the bill," said Dugan. "By now we all know he doesn't like the farm bill, and getting market regulations into effect is far more important than another fit of presidential pique."

The White House has also opposed cuts to the oil industry's taxpayer subsidies, as proposed by Congress, to back renewable energy research and development.

"The major oil companies, hauling in one record profit after another, have absolutely no need for incentives that come from taxpayers' pockets," said Dugan.

Gasoline consumption continues to decline nationally, according to federal energy data, and is falling even more sharply on a per capita basis, noted Consumer Watchdog. There is no actual shortage of supply. European demand is also down, and the forecasts of demand in China and India have been scaled back this year by the International Energy Agency, all without any effect on the price of oil.

Consumer Watchdog has called for:

-- Sales of oil from the federal Strategic Petroleum Reserve. Under stiff
pressure from Congress, President Bush has stopped adding to the
reserve, which is at a record level above 700 million gallons total.
Releasing some of the oil, along with a presidential show of
determination, would add to downward pressure on oil prices.
-- Closing the Enron Loophole in commodity trading regulation. A
regulatory measure in the federal farm bill (S.2058 by Sens. Dianne
Feinstein and Carl Levin) would help stop speculative oil pricing.
(See more on Enron Loophole and farm bill amendment at
http://www.oilwatchdog.org/articles/?storyId=18735 )
-- Increase the amount of margin funds that traders must put up in energy
markets to help suppress speculation. Currently, speculative traders
who never see, sell or buy a barrel of oil are able to control
hundreds of thousands of barrels for only 5% to 7% of the actual
price.
-- Senate approval of an alternative fuels bill to be funded by
withdrawing $1.8 billion a year in unjustified taxpayer subsidies to
oil companies. This measure, passed by the House, has not been taken
up in the Senate, where opponents are using a filibuster tactic to
require 60 votes for passage. A similar House measure was removed from
the federal energy bill by the Senate last year under pressure from
the oil lobby. (Find text of HR 5351 at http://thomas.loc.gov/)
-- Oversight of refinery operations, including regulation of national
gasoline supplies. In the last decade, the average on-hand supply of
gasoline has dropped from 30 days' worth to about 22 days. This makes
prices increasingly sensitive to any cuts in production. Only
government oversight of refineries and regulation to control the
supply of gasoline, nationally and regionally, will keep supplies
adequate to control prices.

First Call Analyst:
FCMN Contact:

Source: Consumer Watchdog

CONTACT: Judy Dugan of Consumer Watchdog, +1-310-392-0522, ext. 305 or
Cell: +1-213-280-0175

Web Site: http://www.consumerwatchdog.org/

2008-06-02 19:06:43 0375360 PRNEWSWIRE