Fuel inquiry finds no abuse

Contra Costa Times ^ | 8/16/6 | Rick Jurgens

[SmithL]

A high-profile search by the Schwarzenegger administration for possible abuses in California's gasoline and diesel markets came up empty Tuesday.

The investigation by the California Energy Commission also shed little new light on the total profits pocketed by the oil companies from operations in this state when a price spike sent the average price of a gallon soaring to $3.33 this spring.

"Our unprecedented study of the oil industry's financial performance did not uncover any 'smoking gun,'" California Energy Commission Chairwoman Jackalyne Pfannenstiel said in a release.

Catherine Reheis-Boyd, chief of staff of the Western States Petroleum Association, echoed that conclusion. "The Energy Commission found no evidence of market manipulation or anti-competitive discussions," she said.

But that didn't impress Tom Dresslar, a spokesman for California Attorney General Bill Lockyer, who is conducting his own investigation. "The oil companies should not consider this exoneration of their conduct," he said. "We're going to continue digging."

Lockyer has subpoenaed oil company financial records and received some documents, and is conducting depositions of company officials including chief executives, Dresslar said.

The Energy Commission investigation was launched with much fanfare in April after California took the brunt of a nationwide rise in gasoline prices. It was the latest in a series of examinations of the state's expensive and volatile fuel markets undertaken in recent years, including a task force convened by Lockyer, a U.S. Senate committee, the federal Energy Information Administration and the state Energy Commission itself.

In the new study, commission analysts estimated that from April 26 through July California motorists spent $14.17 billion for gasoline, with $1.3 billion of that attributable to tight market conditions. That calculation attempted to factor out high crude oil prices that boosted fuel costs worldwide, and focus on the additional costs to the state's drivers from conditions in California's wholesale and retail fuel markets.

Factors that contributed to the state's higher prices included unplanned refinery maintenance shutdowns, abnormally low gasoline production and inventories, increased exports of fuel to Arizona and Nevada, higher additive costs and port bottlenecks that slowed fuel imports.

Service station owners got no apparent profit boost during the price spike, and some lost money, the report found.

This report was issued six weeks earlier than planned to meet a deadline set by the governor's office. "The governor wanted to know as soon as possible whether there was anything askew with the market," said spokesman Darrel Ng.

On Tuesday, Schwarzenegger issued a statement pledging to "continue our vigilance to ensure that market forces are the only factors that influence gas prices in our state."

The report calls for expanded state authority to look at the books of oil companies. However, the current report was issued even though the Energy Commission was still in the process of seeking additional data about oil company profits.

Reheis-Boyd of WSPA said that oil companies would cooperate with investigators, hand over information so long as the confidentiality of sensitive competitive data was protected and not oppose legislation mandating regular data disclosures if it contained similar protections.

Although Tuesday's document was called a "final report," Energy Commission spokesman Rob Schlichting said that "we are going to continue looking into this."

However, additional data that could reveal how much the oil giants profited during a time of intense suffering by California motorists won't be collected and analyzed until November or early December, he said.

That means that any startling new revelations from the Energy Commission about the profitability of the seven oil companies that dominate the California market won't be available during an election season when gasoline prices promise to be a major topic. Advertising campaigns have already begun by opponents and supporters of Proposition 87, a proposal to tax oil well owners to raise $4 billion for alternative energy research.

[SmithL]

Gas companies don't have to manipulate the market to make money. Government regulators, environmentalists, attack lawyers, and assorted NIMBYs have created a perfect environment for the gas companies to pump money by the gallon.

[NonValueAdded]

No, they missed the abuse of yet another useless inquiry at the taxpayer's expense. Further, I presume the companies involved experienced unplanned expenses because of the inquiry, expenses that will be passed along to the consumer.

[Mr. Jeeves]

"The oil companies should not consider this exoneration of their conduct," he said. "We're going to continue digging."

Glad to see Wesley Mouch is still on the job. ;)

[rellimpank]

--amen--

[BurbankKarl]

I am sure they located the record amounts of tax revenue generated by the state and local governments...that was in the report right?

90 cents a gallon?