Senators Grill Oil Executives Over Gas Prices
WASHINGTON, D.C. -- Senators attending an Energy and Natural Resources Committee hearing yesterday demanded an explanation for rising gas prices despite an increase in U.S. oil production, according to a Memphis Commercial Appeal report.
"Our people want to know why the flood of new domestic crude oil isn't lowering prices at the pump," said Sen. Ron Wyden (D-Ore.) chairman of the U.S. Senate Energy and Natural Resources Committee. "There is no question that the lower oil costs are not getting through to Americans' wallets."
Oil production in states such as Texas and North Dakota recently hit a two-decade high point, but the national average for a gallon of regular gas rose 14 cents over the last week, as CSNews Online previously reported. Lawmakers complained that fuel exports and maintenance-related refinery shutdowns have caused regional price spikes, while Valero Energy Corp. pointed to global shifts in crude oil markets and higher costs on the Renewable Fuels Standard (RFS) as being responsible for local price changes. However, lawmakers also claimed that the regional price increases are not tied to the global price of crude oil and that it should not be a factor.
"The fact that this price spike can happen without real supply and demand disruptions is disturbing," said Sen. Maria Cantwell (D-Wash.).
Adam Sieminski, administrator of the U.S. Energy Information Administration, said that supply and demand primarily determine pump prices, and that the U.S. oil production boom and accompanying increase in exports are helping to hold down global oil prices and therefore gas prices in the United States.
Valero CEO William Klesse stated that U.S. gas prices reflect the international crude oil market. "These are commodities and they work in a global market," Klesse said, adding that the price increases caused by refinery outages don't last long, as other refiners will ship in fuel to take advantage. "It's all about supply and demand, and free markets."
Klesse suggested that Congress should rework the RFS, which mandates the use of ethanol, as a decrease in fuel use will cause the share of ethanol to exceed the 10 percent that all vehicles can use safely.
"The oil supply picture has changed, the basis of the original legislation has changed, the RFS should be repealed and new legislation developed," Klesse said.
Committee Chairman Wyden stated his intention to examine issues with the RFS in a separate hearing, according to the report.