SANTA MONICA, Calif. -- Gasoline may cost more than $5 a gallon at retail in England, France and most of the rest of Europe, but a new study shows that multinational oil companies are actually selling gasoline for 24 cents less on average in Europe. That disparity, hidden by much higher European taxes, means that U.S. motorists are pouring more into the profits of oil companies than drivers elsewhere in the world, said the Foundation for Taxpayer & Consumer Rights (FTCR), which commissioned the study.
The study, by independent oil analyst Tim Hamilton, [image-nocss] also found that the U.S. refineries of major international companies have rapidly increased their profit margins over the last four years while in Europe their refinery profits remained nearly stableeven as crude oil prices rose.
Click here to view the new study.
The last argument of the oil companies, when motorists' anger rises at $3-plus gasoline, is to point to higher prices in Europe and tell Americans that they should be grateful, said Judy Dugan of FTCR. What they don't say is that while Europe's higher taxes go to the public treasury, U.S. drivers disproportionately fill the pockets of oil companies and get nothing in return.
The study also notes that in years past, a 24-cent disparity would have triggered European refineries to ship tanker-loads of finished gasoline to the United States to take advantage of higher prices. This did not occur during the spring and early-summer price spike, which topped out in California at more than $3.38 a gallon for regular.
While no single reason for this can be pinpointed, the dominant global oil companies have no reason to ship gasoline that would reduce prices in the U.S. while they are profiting so handsomely from high prices, said Hamilton. Mergers and buyouts have created a handful of giants with global operations and no reason to compete.
An earlier FTCR study found that oil company refineries, particularly in the U.S. West, appeared to be restricting production in order to keep prices at the pump high. The same lack of competition that keeps cheaper European gasoline from entering the United States was responsible for that otherwise inexplicable refinery behavior, said FTCR.
Click here to view the earlier study.
Oil companies faced with waves of public anger and pressure from anxious lawmakers facing re-election are suddenly raising their output in California, said Dugan. It proves they can control pump prices just through refinery output, while drivers in the U.S., more than drivers in the rest of the world, remain at their mercy.
The new FTCR study calls for:
Passage of Proposition 87 on the November ballot in California, to fund research and development of alternative fuel sources that would reduce oil dependence and oil company power. Divestment of oil company-owned refineries to help create a competitive market; Requiring that a percentage of refinery profits be invested in expanding gasoline production capacity; and A long-term government effort to build alternative energy capacity, with the same level of funding and determination that produced the U.S. space program.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.