The Simple Truth of Gas Prices: We Are Being Robbed at Pump Point

by | Apr 4, 2022 | Politics & Corruption, Quick Facts

Prices for gasoline in Menlo Park March 2022. Photo: Jeff Chiu/Associated Press

The Simple Truth of Gas Prices: We Are Being Robbed at Pump Point

by | Apr 4, 2022 | Politics & Corruption, Quick Facts

Prices for gasoline in Menlo Park March 2022. Photo: Jeff Chiu/Associated Press
Another new analysis details how Big Oil executives are suppressing production and boosting prices to maximize shareholder returns.

As President Joe Biden on Thursday ordered the release of one million barrels of oil per day from the Strategic Petroleum Reserve for six months in a bid to reduce surging gas prices, Public Citizen released a report that details how Big Oil is intentionally creating “pain at the pump” to boost profits.

While the fossil fuel industry has tried publicly to pin the blame for soaring gas prices on the Biden administration’s ostensibly strict environmental regulations, oil executives have admitted behind closed doors that they are suppressing production to maximize shareholder returns.

“Oil and gas companies lost a ton of money between 2010 and 2020, mainly by borrowing way too much to fund an expansion of drilling using expensive oil and gas fracking technology,” Alan Zibel, fossil fuels research director at Public Citizen and author of the report, said in a statement. “The result was unsustainable overproduction and massive losses when oil prices plunged, as they did two years ago at the start of the pandemic. Now the industry is keeping production down and making consumers pay.”

After a brief coronavirus-driven decline in 2020, demand returned, but shareholders pressured oil producers to restrict supply to push prices higher. Last year, as average gas prices in the U.S. steadily increased—hitting around $3.40 per gallon in December 2021, up from $2.10 a year before—25 of the world’s biggest fossil fuel corporations raked in a record $205 billion in profits.

Oil and gas companies have hiked prices even further during the first three months of 2022—especially in the three weeks since Biden announced a U.S. ban on imports of Russian fossil fuels in response to Moscow’s invasion of Ukraine, leading to growing accusations of war profiteering. The average price for a gallon of gas in the U.S. is now hovering around $4.23.

With other countries also taking steps to restrict imports of Russian oil and gas, U.S. fossil fuel executives have expressed excitement at the prospect of using ongoing geopolitical crises as an excuse to force consumers to accept higher costs for the foreseeable future, and they are projected to reap up to $126 billion in extra profits this year. After rewarding themselves and other investors with billions of dollars worth of stock buybacks and dividend bumps last year, industry bosses have made clear they intend to do more of the same in 2022.

Beginning around 2010, a drilling and fracking boom turned the Permian Basin into the most productive oil and gas field in the world. It transformed the U.S. into a major exporter of fossil fuels but kept prices at the pump low, much to the chagrin of shareholders.

“It proved to be a colossal financial disaster, and investors have long been frustrated by years of bankruptcies and paltry long-term returns,” the new report explains. “Oil industry executives now say they are focused on pleasing shareholders and running their operations with an eye on making money—rather than simply funding expansion that ends up putting a glut of oil on the market and depressing prices.”

In recent conference calls with investors, “numerous executives have emphasized that shareholder profits, rather than expanding domestic production, is their top goal” now, Public Citizen noted in a statement. “Last week, the Federal Reserve Bank of Dallas published a survey that revealed nearly 60% of executives from 132 oil and gas companies found that investor pressure to keep profits high is the main reason oil producers are restraining growth.”

However, that hasn’t stopped the fossil fuel industry and its Republican allies from deflecting blame for worsening pain at the pump.

As the report documents, on Capitol Hill and on Fox News, GOP lawmakers and Big Oil lobbyists have “shamelessly seized upon the Russian invasion to argue in favor of expanded oil drilling” and fracked gas exports, while baselessly accusing Biden—who approved more permits for drilling on public lands and waters in 2021 than former President Donald Trump did in three of his four years in the White House—of suppressing domestic extraction.

According to the report:

The industry’s playbook is clear: grumble about the Biden administration, ignore climate change, downplay the dramatic growth of clean alternatives and electric transportation, push for looser regulations, promote pet projects such as drilling in Alaska, and lock in drilling for as long as possible.

As Biden boasted earlier this month, U.S. fossil fuel corporations “pumped more oil during my first year in office than they did during my predecessor’s first year.” Domestic oil and gas production is “approaching record levels,” said Biden, “and we’re on track to set a record for oil production next year.”

The president argued that any blame for untapped extractive potential should be placed on the shoulders of those who are sitting on millions of acres of federal property. “They could be drilling right now, yesterday, last week, last year,” Biden said, referring to leaseholders who possess thousands of unused permits.

On Thursday, as he ordered the release of one million barrels of oil per day from the Strategic Petroleum Reserve for six months, Biden called on Congress to impose financial penalties on fossil fuel companies that lease public lands without producing.

Jamie Henn, director of Fossil Free Media, was among those who criticized Biden for failing to “address the root cause” of high prices. Like Public Citizen, Henn attributed pain at the pump to “Big Oil’s coordinated campaign to gouge Americans.”

In a more progressive attempt to rein in price gouging by fossil fuel corporations, congressional Democrats earlier this month introduced the bicameral Big Oil Windfall Profits Tax, as Common Dreams reported.

The measure, which is supported by 80% of U.S. voters, would hit large fossil fuel companies with a per-barrel tax—whether the oil is domestically produced or imported—equal to 50% of the difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019. An estimated $45 billion in annual revenue would be redistributed to U.S. households in the form of quarterly rebates.

“Big Oil executives are reaping windfall profits and driving inflation, pumping up profits while accelerating the climate crisis,” Public Citizen president Robert Weissman said in a statement. “Republican lawmakers and oil industry allies continue to falsely claim that the Biden administration’s ‘hostile rhetoric’ toward the oil and gas industry is stifling investment in the domestic oil industry.”

“The industry’s exaggerated claims and scare tactics are designed to keep the world hooked on fossil fuels that have so devastated our planet,” said Weissman. “The rational response to this crisis moment is a windfall profits tax coupled with a major investment to shift the country—and the world—away from reliance on fossil fuels.”

Republished with permission from Common Dreams, by Kenny Stancil

<a href="http://commondreams.org" target="_blank">Common Dreams</a>

Common Dreams

Common Dreams has been providing breaking news & views for the progressive community since 1997. They are independent, non-profit, advertising-free and 100% reader supported.

Comments

Follow Us

Related Articles

Feb 06 2023

Harvesting the Green: Billions in Federal Farm Subsidies Flow to a Select Group of Producers

The federal government paid more than $478 billion from 2015 to 2021 in farm subsidies for crop insurance, disasters, conservation payments. And the top 1% collected...
Feb 05 2023

The Chinese Spy Balloon: Expert Facts vs. Political Hyperbole

Spy balloons are not new. Monitoring an adversary from a balloon dates back to 1794, when the French used a hot air balloon to track Austrian and Dutch troops.
Feb 03 2023

Private Medicare Advantage Plans That Stole Money From Medicare Are Being Allowed to Keep It

In a dizzying display of twisted “logic,” the Centers for Medicare and Medicaid Services are not requiring repayments of funds stolen through rampant...
Feb 01 2023

Ethics Concerns at the Supreme Court: Roberts’ Wife Is the Latest Flap

The wife of Chief Justice John Roberts, like insurrectionist Ginni Thomas, apparently has been utilizing her position of being “married to the Court” for...
Scott Jenkins, sheriff of Culpeper County, Va., is one of a large number of so-called ‘constitutional sheriffs’ in the U.S. Eva Hambach/AFP via Getty Images
Jan 31 2023

Barrier to Gun Control: The Delusional Authority of Constitutional Sheriffs

The Constitutional Sheriffs and Peace Officers Association has spent more than a decade actively recruiting and training sheriffs to believe that their office is more...
Jan 30 2023

More George Santos: His Top Donors Don’t Seem to Exist

The burners under the pot of questions and investigations surrounding the lies and possible crimes of George Santos appear to have been turned up full blast.
Jan 29 2023

GOP House Goes Big on Hiring Big Oil Lobbyists for Staff Positions

It’s no surprise that Big Oil is infiltrating the halls of Congress after spending millions to elect some of the most extreme legislators in American...
Jan 25 2023

Election Denial Has Been a Lucrative Business for Kari Lake

Kari Lake raised over $2.5 million after her election loss, but less than 10% of her post-election spending went to lawyers.
Jan 24 2023

New Brett Kavanaugh Documentary Hopes to Spark a Full Investigation

A surprise documentary about Brett Kavanaugh reveals disturbing new evidence of misconduct by Kavanaugh and his associates surrounding the right-wing justice’s...
Catherine Engelbrecht, center, founder of True the Vote, and Gregg Phillips, right, at a news conference in Las Vegas Credit: Bridget Bennett/Reuters
Jan 24 2023

Election Deniers True the Vote Sought Funds for an Abandoned Hospital Project in Ukraine

True the Vote, a group that spread discredited election conspiracy theories, “abandoned” The Freedom Hospital in April 2022, according to its lawyers. Yet board member...
Subscribe for Updates!

Subscribe for Updates!

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

Pin It on Pinterest

Share This