Schumer Demands Oil Refinery Investigation

Sen. Charles Schumer claims that gas prices in New York could be much lower.
Schumer Demands Oil Refinery Investigation
PRICE FIXING: Sen. Charles Schumer refers to a chart showing the increase in U.S. oil refineries' profit margins in 2011 outside a BP gas station on 10th Avenue in New York City on May 29. (Catherine Yang/The Epoch Times)
Catherine Yang
5/29/2011
Updated:
10/1/2015

<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/schumerpricefixing.jpg" alt="PRICE FIXING: Sen. Charles Schumer refers to a chart showing the increase in U.S. oil refineries' profit margins in 2011 outside a BP gas station on 10th Avenue in New York City on May 29. (Catherine Yang/The Epoch Times)" title="PRICE FIXING: Sen. Charles Schumer refers to a chart showing the increase in U.S. oil refineries' profit margins in 2011 outside a BP gas station on 10th Avenue in New York City on May 29. (Catherine Yang/The Epoch Times)" width="320" class="size-medium wp-image-1803430"/></a>
PRICE FIXING: Sen. Charles Schumer refers to a chart showing the increase in U.S. oil refineries' profit margins in 2011 outside a BP gas station on 10th Avenue in New York City on May 29. (Catherine Yang/The Epoch Times)

NEW YORK—Sen. Charles Schumer claims that gas prices in New York could be much lower. The price of crude oil has gone down in the last few weeks, but gas prices have been slow to follow.

“The price of oil is down a little bit, but it’s still not enough. The average price in New York is still over $4 a gallon, and that is way too high,” Schumer said at a press conference held on Sunday morning at a gas station on 10th Avenue. “But there’s evidence now that it may not just be the laws of supply and demand.”

On May 17, after a bill to end tax breaks for big oil companies had failed in the Senate, the Senate Democratic leadership addressed the Federal Trade Commission, asking for an investigation into U.S. oil refineries.

The letter, signed by Sens. Schumer, Claire McCaskill (D-Mo.), Patty Murray (D-Wash.), Dick Durbin (D-Ill.), and Majority Leader Harry Reid (D-Nev.), stated that there is strong evidence that U.S. refineries are engaging in price fixing.

According to Schumer, refineries do not traditionally see very high margins and big oil companies make their money in other areas of the business. However, refineries’ margins have nearly doubled since January, rising from 42 cents per gallon to 80 cents in mid-May.

“That is not likely to be supply and demand,” Schumer said. “When the price of oil goes up, gas shoots up like a rocket—but when it goes down, the price of gas seems to fall like a feather. As the price of crude oil and the use of gasoline decline, there are clear signs that refineries may be stockpiling oil, which keeps prices high.”

Schumer said that refineries have been exporting upward of 500,000 barrels of oil a day since February, which is 5 percent of U.S. demand and the highest oil export since data collection started in 1945.

Last month, President Barack Obama launched a multi-agency task force to investigate the oil market. Schumer said that “suspicions at the higher levels of government” could very well imply abuses as well.

Last week, the U.S. Commodity Futures Trading Commission charged crude oil spectators for price fixing and driving gas prices up in 2008. One trading house and two individuals had bought up enough gasoline to fix prices, driving oil prices up to $147 a barrel.

Just over 80 percent of U.S. refineries are being utilized, a 7-percent decline from last year, according to the Energy Information Administration. Schumer said his research has taken into account the refineries affected by the recent floods, and the flood damages do not justify the current gas prices.

According to Reuters, refinery production has gone down by 10 percent since May 11, when docks were shut down due to flooding on the Mississippi River. Exxon Mobil Corp’s 504,500 barrel-per-day refinery reopened last week.

At the May 12 hearing, when the Big Five oil companies—also the largest refineries—refused to renounce the $2 billion tax break, Chevron CEO John Watson said in response to the $34 billion profit the five companies have made this year, “Don’t punish our industry for doing its job so well.”

Schumer said he and his colleagues have yet to hear back from the FTC regarding the investigation.