Increase oversight of petroleum industry
Oil companies have reported record profits in the quarter that includes Gulf Coast storms.
GASOLINE prices on the mainland and, thus, in Hawaii have returned to pre-hurricane levels, but questions remain about the high prices charged in areas that should not have been affected by the storms. Record profits recorded by oil companies during the episode have led to calls for a windfall profit tax, but that would only aggravate the problem, leading to even higher prices.
Supply and demand remain the key determinants of prices, and demand has risen steadily in recent decades. The hurricanes have caused little if any change of direction. Although Hawaii's lack of competition among oil refiners allowed them to price petroleum at obscene levels, gasoline price caps based on mainland levels, which took effect Sept. 1, appear to be working.
The questions arise from the fact that Big Oil is benefiting while most Americans struggle. Exxon Mobil alone reported a $9.92 billion profit on $100 billion in revenue for the past quarter. In questioning oil executives at a Senate hearing this week, Senator Inouye suggested price hikes were "unconscionably excessive."
Lee Raymond, Exxon's chairman and chief executive, responded that profits are "in line with the average of all U.S. industry. Our numbers are huge because the scale of our industry is huge." He said the company spends vast amounts on developing future supplies of oil.
The Federal Trade Commission has begun an investigation of possible price-gouging following the hurricanes. Congress needs to increase its oversight of the oil industry to prevent future abuses.
Likewise, oversight is needed at the state level to determine whether oil companies used the gas cap to take advantage of mainland price increases following the hurricanes that should have no market effect in Hawaii, which gets its crude oil from Asia and Alaska. The Legislature should resurrect a bill that died in the last session to create a watchdog system of monitoring and reporting on the petroleum industry.
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