Price hike inflated big oils profits 300% A state task force finds no illegalities, just lots of extra cash for the industry.

By Carmel Perez Snyder News-Leader

JEFFERSON CITY  High fuel prices in Missouri were caused by an increase in oil company profits, according to a report released Wednesday by the Governors Task Force on Gasoline Prices.

Gov. Mel Carnahan created the task force, headed by Attorney General Jay Nixon, after prices reached a statewide record of $1.80 per gallon for regular unleaded gas in mid-June.

Nixon said the one-month report found no illegal activity in Missouri. But while consumers were struggling to pay the high prices, oil company refineries enjoyed profits of 300 percent or more during the second quarter of this year compared with the same quarter last year.

I dont want people to think that the little guy on the corner made lots of money. This is not the little guy, said Rep. Bill Ransdall, D-Waynesville, chairman of the House Interim Committee on Fuel Prices created by Speaker Steve Gaw, D-Moberly.

Distributors also say they lost money because of the high prices.

It affected us quite a bit, said Jerry Carroll, president of Morris Oil Products in Springfield. Our profits didnt go up. I made more money when prices were 91 cents at the pump.

Carroll said distributors were paying high prices and couldnt raise their prices to retail outlets because prices were already high.

During hearings of both the Task Force and Interim Committee, oil company representatives said the price increase stemmed from a drop in supply and the cost of producing reformulated gasoline.

They cant blame this on supply and demand and they cant blame this on the EPA, Ransdall said. St. Louis (reformulated gas) ran 20 cents cheaper than the rest of the state.

Gasoline prices dropped dramatically after federal and state investigations began. That caused a bigger problem for distributors, Carroll said.

Oil companies dropped their prices and we had gas we had paid $1.75 for in the ground, he said. We had to eat the prices and lost money.

Despite the big oil company profits, Carroll said he believes production cuts by the Organization of Petroleum Exporting Countries and a supply line break in Texas contributed to the high prices.

Oil executives have told the task force that several factors, including supply problems and higher demand for reformulated fuel and other special blends, caused the price spike.

Im not buying it, Ransdall said.

The Interim Committee will hold two more meetings in August in St. Louis and Jefferson City before releasing its report in September.

http://www.springfieldnews-leader.com/news/n081000a.html

-- Martin Thompson (mthom1927@aol.com), August 10, 2000