ECONOMIST SAYS GAS PRICES NOT RIGGED

Lisa Margonelli's Oil On The Brain has a superb analysis of all the things that go into gas price.

Caruso questions refining capacity manipulation allegations
Nick Snow, June 15, 2007 (Oil & Gas Journal)

WHO
US Energy Information Administration (EIA) Administrator Guy F. Caruso, considered the government’s top energy economist; Senate Small Business and Entrepreneurship Committee; Sal Lupoli, president/CEO, Sal's Pizza; Janet Myhre, government services group director, Chuckals Inc.; Frederick W. Smith, chairman/president/CEO, FedEx Corp.; Timothy P. Lynch, senior VP, American Trucking Associations Inc.;
click to enlarge
WHAT
By Caruso’s economic analysis, the gasoline inventory shortfalls in May which drove prices up were not the result of manipulations but of “unplanned refinery unit shutdowns.”
WHEN
Testimony to Senate committee June 14.

WHERE
The EIA is the statistics section of the Department of Energy (DOE)
Sal's Pizza is in Lawrence, MA
Chuckals Inc. is in Tacoma, WA
FedEx is based in Memphis, TN

WHY
Standard refinery practice: shutdowns for maintenance/equipment repair in January and February.
EIA outlook, June 12: US regular gasoline will average $3.05/gal nationally this summer due to high demand/low inventories. Oil: $65+/barrel.
The increased cost is putting stress on businesses dependent on oil and gasoline, from deliveries to plastics.
Smith’s Energy Security Leadership Council called for Congressional stipulation of alternative fuels use and improved fuel efficiency in the US transportation fleet as well as more opportunity at responsible production of unrecovered domestic oil and gas.

Truckers are worried about requirements for ultra low sulfur diesel (ULSD), which is environmentally superior but more costly.
but perhaps the fault lies not in our stars but in ourselves...(click to enlarge)

QUOTES
- Caruso: "The companies try to plan this…No individual company would take down a refinery to reduce sales. Their objectives are to maximize sales. What went wrong was that there were a number of unplanned outages…While we're not an investigative agency, we haven't seen any attempt to manipulate the marketplace…With the hurricane season beginning, continued tight refining conditions and low gasoline inventories, and increased demand for summer travel, upward pressure on gasoline prices does remain a concern."
- Lupoli: "Whatever the cause, the volatile and increasing cost of gasoline is wreaking havoc on small businesses…Rising fuel costs have a direct impact on my means of delivery for my business, and on my employees who often can't afford gasoline for their cars so they can come to work. We encourage car-pooling and public transportation, but these options are not always available."
- Myhre: "We're at a level where we have to decide whether to scale back our operations. Maybe we'll lay off some local employees and start to use an outside delivery service…"
Smith: "As oil prices go up, we add surcharges. At times during this recent run-up, our prices have gone as much as 20% higher for our air express business, and slightly less for our ground business. Over the last 3 years, we have steadily increased the base crude oil price…"
- Lynch: "Many of the problems anticipated [with ULSD] have not materialized. We support [biodiesel's] use but believe that national standards are needed, with pre-emption of state mandates, so it will be a uniformly high-quality fuel..."