While Americans have seen the price of gas skyrocket in recent months — for a variety of reasons — oil companies have reported record profits.
In the first quarter of this year, London-based Shell saw adjusted earnings of $9.1 billion — an increase from $3.2 billion for the same period the previous year. BP reported profits of $6.2 billion for the first three months of this year, and Exxon Mobil reported profits of $5.48 billion.
The point is not to denigrate companies for making a profit; that is what keeps them in business and what keeps the economy running. But Congress is right to expect more transparency from corporations that are harvesting record profits while American consumers are feeling pain at the pump.
Sen. Maria Cantwell, D-Wash., chair of the Senate Commerce, Science & Transportation Committee, plans to introduce legislation this month that would direct the Energy Information Administration to collect more detailed disclosures about the pricing of fuel. It also would increase Federal Trade Commission oversight of possible market manipulations and would double penalties for companies found to be in violation.
“How can we shine a light on the black box to expose any anti-competitive dark trading, making sure there aren’t a bunch of smart guys in the room hurting consumers because they think we can’t figure out what is happening when there is a lack of transparency?” Cantwell asked during a committee hearing.
Anne Bradbury, CEO of the American Exploration & Production Council, responded: “Using the power of the FTC to undertake political investigations of American energy companies will not lower gas prices by a penny. Energy prices are determined by supply and demand, not false accusations of ‘price gouging’ motivated by the upcoming election instead of the facts.”
The facts are that there is more to it than supply and demand. If the reason for rising gas prices is as simple as the petroleum industry suggests, then executives should have no qualms about increased transparency. Allow the American people to peek behind the curtain; allow the public to see what they are getting in exchange for billions of dollars in annual subsidies to oil companies.
Supply, indeed, has been hampered by sanctions against Russia following that nation’s invasion of Ukraine and by global supply chain issues; and demand has ballooned thanks to a busy economy. Those contribute to rising prices. In the meantime, the United States remains the world’s largest petroleum producer, as it has been since 2012.
Gas prices in Washington are among the highest in the country. A Seattle Times analysis of data from AAA shows that from 2017 to 2021, the average cost of a gallon in the state was 45 cents higher than the national average, after adjusting for state gas taxes. Add in a state tax of 49.4 cents per gallon, among the nation’s highest, and Washington drivers are routinely getting soaked.
Part of the reason for that is supply. Washington has five oil refineries in the Puget Sound region, but the western portion of the state does not have access to pipelines that deliver oil more cheaply. Part of that is demand, with a robust regional economy driving the need for fuel to transport goods.
But there are reasonable questions that arise from Washington’s inordinately high gas prices and from record profits for oil companies.
Congress is wise to press those questions and demand answers from the powerful petroleum lobby. Consumers deserve it.