June 7, 2012
Seattle PI -
U.S. Sen. Maria Cantwell, D-Wash., on Thursday called on the Federal Trade Commission to investigate Washington state’s near-record high gas prices and whether oil companies have manipulated the market.
Cantwell pointed to a recent report estimating that oil companies are earning a windfall profit of $48 million per day on the West Coast’s high prices.“
May was a tough month for any Washington state family or business filling up at the pump,” Cantwell wrote in a letter
to the FTC commissioners.”That’s money that American families and businesses could be spending at local retail stores, neighborhood restaurants, and other small businesses that create more than two thirds of our nation’s jobs.”
Washington now has the highest pump prices in the lower 48 states, despite falling crude oil prices and cheaper gas everywhere except the West Coast. The national average dropped 17 cents per gallon over the month of May while prices in Washington state inexplicably spiked, Cantwell said.
AAA reports the average price in Washington now at $4.22 per gallon, compared to a national average
“These prices are not only a burden and source of frustration for my constituents, they raise questions as to why a state that produces much more refined product than it consumes is forced to pay so much more than the rest of the country,” Cantwell wrote.
A fire at BP’s Cherry Point refinery near Blaine in February has been blamed for the spike. The refinery was shut down for three months, taking 225,000 barrels per day of refining capacity off-line. The refinery produces 20 percent of Washington’s gasoline and supplies most of the jet fuel for Sea-Tac International Airport.
But the shutdown should not have resulted in historically low gasoline inventory levels unless other West Coast refiners failed to make up for the supply shortages, the letter said. “The reasons why six other West Coast refineries simultaneously reduced operations are not well documented,” the letter said.
Cantwell pointed to a report
by consultant McCullough Research of Portland, which questioned whether prices were the result of the Cherry Point fire and maintenance shutdowns at California refineries or of “pivotal suppliers taking advantage of an opportunity to force retail prices up for a windfall profit.”
Washington’s prices closely correlate with international gas prices and have been stable until recent weeks. Normally, prices would have fallen to $3.51 per gallon this week if they had followed supply costs, according to the report.
“As of yesterday, actual prices now are $.77/gallon higher than would have been expected given crude oil prices,” the report said. “At a differential of $.77/gallon, this translates into a windfall profit for suppliers of $48 million dollars a day,” the firm’s report said.
McCullough Research was instrumental in exposing Enron’s manipulation of electricity markets a decade ago.
Last year, Cantwell pressured the FTC to use a new law she authored to investigate speculators’ role in driving up oil prices. And during a hearing in May 2011, when oil was trading at just under $100 per barrel, Cantwell questioned the CEO of Exxon Mobil and prompted him to acknowledge that oil should have cost between $60 and $70 per barrel had the prices been based solely on supply and demand.Click here to read the article from the publication's website