My
name is Emily Rusch and I am a Consumer Advocate with CALPIRG, the
statewide public interest advocacy organization. CALPIRG is here today
to support efforts to investigate and prevent price gouging of
gasoline.
In
addition to state level investigations, Congress should also conduct
their own investigations, prevent price manipulation by the oil
companies, repeal the $10.7 billion dollars in tax breaks for the oil
and gas industry, and reduce consumer dependence on oil through fuel
efficiency standards.
A
decade ago, the five largest oil companies controlled 34% of domestic
crude oil production, 33% of domestic refining capacity, and 27% of the
retail market. Now the five largest firms – ExxonMobil, ChevronTexaco,
ConocoPhilips, BP, and Royal Dutch/Shell – control about half of
domestic oil production and 62% of the retail gasoline market. As a
result of fewer companies controlling the marketplace, there is less
pressure to reduce prices to attract customers, and companies are able
to intentionally increase prices to help their bottom line. For
example, in 2001 the U.S. Federal Trade Commission found that oil
companies withheld gasoline supplies in a deliberate move to increase
prices and boost profits.
However,
even without price manipulation, oil prices will only increase in the
future. Oil production and refining capacities that have been
sufficient to supply global demand for oil for the past several decades
are now inadequate. Even ExxonMobil predicts that non-OPEC oil
production will peak within the next decade. With less supply to meet
demand, more and greater price spikes are predicted for the future.
Therefore,
to protect consumers from high gasoline costs, which aren’t going away,
we must wean ourselves off of our dependence on oil. As President Bush
visits Northern California this weekend, and even visits the Califonia
Fuel Cell Partnership in West Sacramento, California leaders including
Governor Schwarzenegger must pressure the President to stand up for
California consumers and increase the fuel efficiency of cars and
trucks.
Currently,
fuel economy of cars and light trucks is at a 24-year low of 20.8 miles
per gallon (for 2004 models). According to the National Academy of
Sciences, we can harness America’s technological knowledge and
experience to require light trucks and automobiles meet a 40 miles per
gallon average standard over ten years. In our 2005 report America
Idles, CALPIRG found that if the President had implemented this
standard in his first term, American consumers would have saved $5
billion dollars in fuel costs in the year 2005. We would have consumed
350,000 barrels of oil less per day, which is more than half of the
imports from Iraq.
As
the second largest consumer of gasoline in the world (behind only the
United States as a whole), California has a lot to lose from high
gasoline costs. Until the President Bush puts consumer interests ahead
of oil industry profits and improves fuel efficiency, consumers will
continue to suffer at the gas pump.
