News Release

Gas Prices

JOAN CLAYBROOK
TYSON SLOCUM
Claybrook is president of Public Citizen. Slocum is director of Public Citizen’s Energy Program. Claybrook said today: “Oil executives and speculators are getting rich on the backs of American consumers. Indeed, on average, it costs a company such as Exxon Mobil about $20 to extract a barrel of oil, which in turn is sold for more than $115 a barrel. Refiner profit margins have also been soaring at vertically-integrated oil companies, which helps explain how the largest five oil companies in America have posted more than $550 billion in profits since 2001. Some of these profits are going into the pockets of the oil company CEOs, with many making more than $30 million a year and some making much more than that when stock packages are taken into consideration, according to published reports.

“And speculators on Wall Street such as hedge funds and investment banks are exploiting unregulated trading markets to push prices far above what can be explained by supply and demand fundamentals.

“With the current average price for a gallon of gas over $3.60 per gallon, about 70 cents per gallon is pure speculation unrelated to supply and demand, according to our estimates. A recent U.S. Senate investigation concluded that both Goldman Sachs and Morgan Stanley each earned about $1.5 billion in net revenue from energy trading in 2005. Some oil companies have been recently caught with their hands in the cookie jar, with BP paying $303 million to the federal government in October 2007 to settle allegations it manipulated propane prices. With the irresistible temptation to benefit from this huge cash flow, other manipulations are occurring in the unregulated oil and gasoline futures market.”

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167