Record Gas Prices Fueled By Oil Manipulation? Senators Want Big-Time Investigation

By Dennis Romero Wed., Nov. 28 2012 at 8:04 AM

Paretz Partensky / Flickr

If you felt reamed during October's California gas-price spike, in which records were set at the pump even though there was no real oil supply crisis at all, you have some powerful company.

The U.S. senators from California, Washington and Oregon this week asked the U.S. Department of Justice to do a "refinery-by-refinery investigation into the cause of spikes that drove gas prices to more than $4 a gallon in Western states during May and October."

That according to ...

... the office of our own Sen. Dianne Feinstein.

Here's the deal:

@AntonioNBCLA

Gas prices on Oct. 7.

Refineries in California, including the South Bay's Tesoro plant and others in the Bay Area, shut down or ran at limited capacity, ostensibly because of fire, equipment breakdowns and other issues.

All this happened on the eve of the state's annual switch over to winter blends, when refiners don't usually stock up on summer gas as they anticipate a mandatory transition to a new blend.

Coincidence?

Recent reports allege that there is evidence that some of these plants continued operating despite company statements that they were down for repairs and maintenance.

The senators want answers. Gas for top-octane fuel in L.A. reached the $6 range at some stations. Feinstein and the other senators write:

We are requesting a Department of Justice investigation of possible market manipulation and false reporting by oil refineries which may have created a perception of a supply shortage, when in fact refineries were still producing.

Fired up? Don't forget to add gas.

[@dennisjromero / djromero@laweekly.com / @LAWeeklyNews]

Tags:

Dianne Feinstein, gas, gas prices, refineries

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abramsrl

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Before we look to the gas companies as the culprits for spiking prices, we need to look at the media. Quite often, there is no gasoline shortage to merit the price increase and that seems to be the situation with October.

The media often frightens people into falsely believing that there will be a shortage and people then go out and immediately buy a lot more gas that otherwise. People are not responding to any actual shortage, but to their belief that there is a shortage. As the purchase volume increases, the sellers realize that they can raise the price and as the price at the pump increases, the media sends out crews looking for the highest prices. Then, they report the high prices, which were caused the the original news stories about shortages, and people panic and go out an buy more gas even when their tanks is 3/4 full.

Some stations run out of gas, since the gasoline has been transferred from the huge tanks in the ground to all the millions of small tank driving around town. The media then rushes to the gas stations that had to shut down because they ran out gas. Oh Lordie, me, the world is ending!!! Buy more gas!

In most of these gas panics including the hysteria back in the 1970's, there is no shortage of gasoline. Just a shortage of brains. There is generally enough gasoline in the system itself that the levels of gasoline in various refineries and storage tanks may fluctuate, the fluctuation is not enough to actually affect the Supply and Demand.

Which dumps more extra cash into the pockets of the oil companies? Congress or the media with it foolish stories about alleged gas shortages?