| The Truth Behind Gas Prices |
| Copyright © 2007, Richard Clough |
Contents
Introduction ------------------------------- 1
Chapter 1 Record Profits ------------------------------ 3
Are Americans paying for the Oil Industry’s record profits?
Chapter 2 Oil Companies ---------------------------- 17
Who are these money-guzzling corporations?
Chapter 3 Competition or Collusion --------------- 31
Is there a competitive market with a level playing field?
Chapter 4 Oil Company Control --------------------- 53
Who is really making the money?
Chapter 5 Federal Trade Commission ------------- 67
Regulators or Cohorts?
Chapter 6 Pricing Across America ------------------ 85
Why do prices vary across the country?
Chapter 7 Refineries ------------------------------- 107
Who owns them?
Chapter 8 Excuses, Excuses, Excuses ------------ 121
The classic account of escalating fuel prices
Chapter 9 Oil Suppliers ---------------------------- 133
Why so much talk about OPEC?
Chapter 10 Stopping the Madness ----------------- 145
Can Oil Companies be Trusted?
Appendix I: Royal Dutch-Shell Company Listings ------167
Appendix II: Gasoline Taxes by State, 2002 ---------------169
Appendix III: U.S. Refineries Capacity ---------------------171
Introduction
Wouldn’t it be great to be in business and have a product everyone needed? And what if
within this enterprise your competitors were few and far between? Or better yet what if
you could arrange it so that in your utopia competitors were not even truly competing
against you, but had some type of alliance that would benefit all of your pocketbooks?
Interested? Well then, welcome to the United States of America’s oil and petroleum
business!
This industry can be somewhat complicated, but it is not difficult to understand. Does it
make sense for our country and economy, which is fueled by oil and gas, to allow five oil
companies to control 62% of the industry? These major oil companies are the explorers,
producers, refiners, wholesalers, transporters and marketers/retailers of the oil and gas
products. These few companies control the oil industry from the time it comes out of the
ground until it reaches your home, car or business. Retail gasoline service station
owners and operators have filed countless lawsuits against oil companies in the past ten
years. The result has been that Mom and Pop operations are virtually becoming extinct
because in litigation big oil’s pocketbooks just hold out longer than the station owners’.
The owners have tried to look for help from governmental organizations designed to
protect businesses and consumers. But the data points to our governments laissez faire
attitude, and particularly to the Federal Trade Commissions and the Department of
Justice’s approach to “protecting” consumers or business interests as they pertain to
the oil industry.
Big oil companies have great public relations machines that release information about
why fuel and home heating prices are rising or why they are so high. You may think you
are helpless to fight higher fuel prices, but this is not true. Petroleum prices affect
everyone’s personal pocket book and virtually every business in America. In the bigger
picture, oil and gas prices have a huge impact on the well being of this country and of the
world.
The oil industry needs to be accountable not only to its stockholders, but to the public at
large. It needs to be a good steward of our communities’ resources. Integrity is a word
that corporate America should abide by and subscribe to. We have witnessed too many
companies that have not been truthful or fair with their consumers and stockholders. Is
being truthful and fair too much to ask?
As a former gas station owner and Texaco dealer, I can speak with first-hand knowledge
of oil company pricing practices, their control of the marketplace, and even the oil
industry’s ego and attitudes. This book will specifically look at what can be done to bring
down the price of fuel. We will consider some very important questions and explore their
answers; including questions such as: Will a gasoline boycott be productive? Will a
boycott of one company bring down the price of the entire industry? What is divorcement
and will it work? Why don’t we have alternative fuel sources for our automobiles? Do we
need to increase regulations or have mandates on refineries? Our energy policy has not
changed in the last thirty years; isn’t it time for a change?
My hope is that you’ll consider the overwhelming evidence that supports the numerous
claims of oil company collusion and parallel pricing. By better informing yourself through
reading this book and witnessing the active efforts by oil companies to limit competition
through price discrimination, anti trust-practices, raising rents, eliminating rebate
programs, zone pricing, price-fixing, manipulation, limiting production, and controlling
supply, I trust that you (and all of America) will realize the detriment of allowing these few
firms to control such a vital marketplace and become enraged enough to take action!
Richard Clough
CHAPTER 1
Are Americans Paying for the Oil Industry’s Record
Profits?
Record Profits
It is estimated that the U.S. consumes over 20 million barrels of oil every day, about 27%
of the world’s total consumption; if lined up in one gallon cans, they would encircle the
earth’s equator nearly six times. The United States Department of Energy asserts that,
“Oil and natural gas are the lifeblood of the U.S. economy.”
Americans spend over $500 billion on energy annually with oil providing over 40% of our
total energy demands and 99% of the fuel for our vehicles. Sixty percent of U.S.
consumption is imported at a cost of $174.4 billion+ per year, amounting to the largest
single element of our trade deficit. Yes, we can all agree that oil and natural gas is the
livelihood of our economy.
The United States’ top three oil companies reported record third quarter earnings as the
surge in oil and gas prices helped push up profits sharply. Exxon-Mobil, the United States’
largest oil company nearly doubled its quarterly profits. The Irving, Texas company
earned a record $4.29 billion in the quarter, up from $2.19 billion in the same period a year
earlier. Chevron more than doubled its third quarter profits. The California based
company’s quarterly earning rose to $1.65 billion, while revenues came in at $13.6 billion.
Texaco was reporting third quarter profits rising 80% to $815 million. These numbers
being reported are third quarter results from the year 2000. Yes, even then oil companies
were reporting record shattering results. For their results all three…
Introduction ------------------------------- 1
Chapter 1 Record Profits ------------------------------ 3
Are Americans paying for the Oil Industry’s record profits?
Chapter 2 Oil Companies ---------------------------- 17
Who are these money-guzzling corporations?
Chapter 3 Competition or Collusion --------------- 31
Is there a competitive market with a level playing field?
Chapter 4 Oil Company Control --------------------- 53
Who is really making the money?
Chapter 5 Federal Trade Commission ------------- 67
Regulators or Cohorts?
Chapter 6 Pricing Across America ------------------ 85
Why do prices vary across the country?
Chapter 7 Refineries ------------------------------- 107
Who owns them?
Chapter 8 Excuses, Excuses, Excuses ------------ 121
The classic account of escalating fuel prices
Chapter 9 Oil Suppliers ---------------------------- 133
Why so much talk about OPEC?
Chapter 10 Stopping the Madness ----------------- 145
Can Oil Companies be Trusted?
Appendix I: Royal Dutch-Shell Company Listings ------167
Appendix II: Gasoline Taxes by State, 2002 ---------------169
Appendix III: U.S. Refineries Capacity ---------------------171
Introduction
Wouldn’t it be great to be in business and have a product everyone needed? And what if
within this enterprise your competitors were few and far between? Or better yet what if
you could arrange it so that in your utopia competitors were not even truly competing
against you, but had some type of alliance that would benefit all of your pocketbooks?
Interested? Well then, welcome to the United States of America’s oil and petroleum
business!
This industry can be somewhat complicated, but it is not difficult to understand. Does it
make sense for our country and economy, which is fueled by oil and gas, to allow five oil
companies to control 62% of the industry? These major oil companies are the explorers,
producers, refiners, wholesalers, transporters and marketers/retailers of the oil and gas
products. These few companies control the oil industry from the time it comes out of the
ground until it reaches your home, car or business. Retail gasoline service station
owners and operators have filed countless lawsuits against oil companies in the past ten
years. The result has been that Mom and Pop operations are virtually becoming extinct
because in litigation big oil’s pocketbooks just hold out longer than the station owners’.
The owners have tried to look for help from governmental organizations designed to
protect businesses and consumers. But the data points to our governments laissez faire
attitude, and particularly to the Federal Trade Commissions and the Department of
Justice’s approach to “protecting” consumers or business interests as they pertain to
the oil industry.
Big oil companies have great public relations machines that release information about
why fuel and home heating prices are rising or why they are so high. You may think you
are helpless to fight higher fuel prices, but this is not true. Petroleum prices affect
everyone’s personal pocket book and virtually every business in America. In the bigger
picture, oil and gas prices have a huge impact on the well being of this country and of the
world.
The oil industry needs to be accountable not only to its stockholders, but to the public at
large. It needs to be a good steward of our communities’ resources. Integrity is a word
that corporate America should abide by and subscribe to. We have witnessed too many
companies that have not been truthful or fair with their consumers and stockholders. Is
being truthful and fair too much to ask?
As a former gas station owner and Texaco dealer, I can speak with first-hand knowledge
of oil company pricing practices, their control of the marketplace, and even the oil
industry’s ego and attitudes. This book will specifically look at what can be done to bring
down the price of fuel. We will consider some very important questions and explore their
answers; including questions such as: Will a gasoline boycott be productive? Will a
boycott of one company bring down the price of the entire industry? What is divorcement
and will it work? Why don’t we have alternative fuel sources for our automobiles? Do we
need to increase regulations or have mandates on refineries? Our energy policy has not
changed in the last thirty years; isn’t it time for a change?
My hope is that you’ll consider the overwhelming evidence that supports the numerous
claims of oil company collusion and parallel pricing. By better informing yourself through
reading this book and witnessing the active efforts by oil companies to limit competition
through price discrimination, anti trust-practices, raising rents, eliminating rebate
programs, zone pricing, price-fixing, manipulation, limiting production, and controlling
supply, I trust that you (and all of America) will realize the detriment of allowing these few
firms to control such a vital marketplace and become enraged enough to take action!
Richard Clough
CHAPTER 1
Are Americans Paying for the Oil Industry’s Record
Profits?
Record Profits
It is estimated that the U.S. consumes over 20 million barrels of oil every day, about 27%
of the world’s total consumption; if lined up in one gallon cans, they would encircle the
earth’s equator nearly six times. The United States Department of Energy asserts that,
“Oil and natural gas are the lifeblood of the U.S. economy.”
Americans spend over $500 billion on energy annually with oil providing over 40% of our
total energy demands and 99% of the fuel for our vehicles. Sixty percent of U.S.
consumption is imported at a cost of $174.4 billion+ per year, amounting to the largest
single element of our trade deficit. Yes, we can all agree that oil and natural gas is the
livelihood of our economy.
The United States’ top three oil companies reported record third quarter earnings as the
surge in oil and gas prices helped push up profits sharply. Exxon-Mobil, the United States’
largest oil company nearly doubled its quarterly profits. The Irving, Texas company
earned a record $4.29 billion in the quarter, up from $2.19 billion in the same period a year
earlier. Chevron more than doubled its third quarter profits. The California based
company’s quarterly earning rose to $1.65 billion, while revenues came in at $13.6 billion.
Texaco was reporting third quarter profits rising 80% to $815 million. These numbers
being reported are third quarter results from the year 2000. Yes, even then oil companies
were reporting record shattering results. For their results all three…
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