Study: Big oil cut inventory to boost gas prices

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Study: Big oil cut inventory to boost gas prices

By MARTHA IRVINE The Associated Press 10/18/00 3:16 PM

CHICAGO (AP) -- A consumer rights group Wednesday accused oil companies of intentionally creating shortages in the Midwest that sent gasoline prices climbing to more than $2 per gallon earlier this year.

"Pump shock is caused by manipulation of refiners' stockpiles," said Jamie Court, executive director of the California-based Foundation for Taxpayer and Consumer Rights. "And it's foolhardy not to regulate and monitor those more regularly."

Oil officials have said they only passed on price increases resulting from decisions by OPEC to limit crude oil production. They have also blamed price increases on requirements that oil companies sell reformulated gas in parts of the Midwest.

But study author Tim Hamilton said that OPEC increases would have caused pump prices to rise more uniformly and that companies had plenty of time to prepare for reformulated gas.

He also said he found evidence that Midwest refiners sent reserves to other states and out of the country before prices spiked in June. He said more than a third of the transfers went to Texas and Louisiana, oil-producing states that already have big reserves.

Because of the spike in prices, drivers in Illinois alone paid an extra $374 million for gas during a 90-day period this past spring and summer, according to the report.

Representatives of the Illinois Petroleum Council did not respond to a request for comment Wednesday.

But Paul Torstrick, a spokesman for the Illinois Petroleum Marketers Association -- which represents gas marketers and some refineries -- called the study "insulting."

"I don't think there's any colluded effort on behalf of the refiners that service the Midwest to not adequately supply their customer base," Torstrick said.

"They took a 90-day slice out of a very complicated business and they're trying to microanalyze it to support their decision -- and I don't think that's fair."

Hamilton said his data were based on federal reports.

http://www.nj.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi?a0685_BC_GasPrices&&news&newsflash-national

-- Martin Thompson (mthom1927@aol.com), October 18, 2000

Answers

The "Foundation for Taxpayer & Consumer Rights" sounds like a typical wacko nut group. And, wouldn't you know it: they are California-based. Figures.

-- JackW (jpayne@webtv.net), October 19, 2000.

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