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Big Oil buys Sacramento
Why you're not hearing a peep from California politicians on
record-high gas prices.
By Jamie Court and Judy Dugan,
05/15/07 "Los
Angeles Times" -- 05/14/07 -- - WHO'S AFRAID of
Big Oil? Apparently, California's elected officials. Gasoline
prices are stuck well above last year's record highs and about
50 cents above the national average. Yet state politicians are
not saying or doing a thing, except for raking in political cash
from the oil companies and flying around the world on their
dime.
Take Gov. Arnold Schwarzenegger, who once claimed that he was so
rich he did not need anyone else's money — and who isn't running
for another office. Yet as gasoline prices were breaking last
year's record of $3.38 a gallon, Schwarzenegger collected a
$100,000 check May 1 from Chevron, the West's largest refiner.
The company certainly had the cash on hand. Just three days
earlier, it reported a $4.7-billion first-quarter profit, up 18%
over the same period last year.
The contribution brought Schwarzenegger's take from Chevron to
$665,000 (making it his 15th largest donor) since 2003, and his
total political tribute from the energy industry is now $4
million. According to a recent Schwarzenegger fundraising
solicitation, Chevron's $100,000 buys the company special
briefings with the governor, something that beleaguered
motorists aren't getting.
Like power plant owners during California's 2001 electricity
crisis, refiners such as Chevron have discovered that they can
make more money by producing less gasoline. So they do. They
have, over more than 20 years, deliberately reduced their
capacity until they can barely meet California's needs under the
best of circumstances. Industry spokesmen defend this as
efficiency. But there is no slack in the production system,
which shorts the market and raises prices.
Any planned or unplanned refinery outage, pipeline break or
power failure causes prices to jump.
Take the case of a possum and a raccoon that, in March, bit
through power substation lines feeding two refineries in the
South Bay. The critters expired, but the outage caused a 7-cent
jump in local wholesale gasoline prices. The cost of refining
gasoline is stable over time, so these price spikes equal pure
profit for Chevron and Co.
Gasoline isn't like potato chips or even automobiles, which are
made by competitive companies that have to persuade purchasers.
Gasoline is a product we can't spurn and for which there are no
widely available alternatives. The lack of competition makes the
situation worse.
Chevron refined 22% less oil in the U.S. during the first
quarter of this year than in the same quarter of 2006 because of
longer "planned maintenance" downtime and accidents. Yet its
total profit on U.S. refining increased 66%. Making less
gasoline, it made much more money.
So why is there no special legislative session on the gasoline
crisis? No talk of regulating refiners to make supply meet
demand?
Oil companies poured $90 million into California political
campaigns during the 2006 election cycle. This display of sheer
political muscle deters even well-meaning politicians from
clashing with Big Oil.
Democrats take Big Oil's millions too. The state Democratic
Party accepted $50,000 from Chevron just last week. Campaign
finance rules don't tell us which candidates Chevron might find
most deserving of that money, but it's foolish to think such
suggestions are not made.
Just as troubling is the access that oil companies have to our
elected officeholders that the public doesn't.
Schwarzenegger's powerful chief of staff, Susan P. Kennedy, and
her partner spent a legislative spring break in Rio de Janeiro
at the posh Copacabana Palace with Democratic Assembly Speaker
Fabian Nuņez and his wife — on the tab of a foundation largely
financed by Chevron and other energy companies. During the
12-day conference, Chevron's lobbyist got an entire day on the
official agenda, which the public knows about only because of
our Public Records Act request. Nuņez, who last year was highly
critical of oil companies, seems to have nothing to say this
year.
The chairs of the state Senate and Assembly energy committees
spent spring break in Japan sipping sake and munching sushi with
energy and telecommunications executives. The trip was financed
by the same foundation, the California Foundation on the
Environment and the Economy. On board was an executive with
Sound Energy Solutions, a company working with ConocoPhillips to
establish a liquefied natural gas, or LNG, terminal at the port
of Long Beach. Residents have stalled that particular project,
no thanks to a junket itinerary that included a lengthy LNG
plant tour.
No matter what underlies the current inaction on gas prices, the
governor and legislators should understand that consumers' rage
may not be fleeting. Former Gov. Gray Davis discovered that in
the 2003 recall as the energy crisis lingered in memory.
Schwarzenegger is more popular, but he is not immune to the
anger mounting over every $75 fill-up of the minivan.
JAMIE COURT and JUDY DUGAN are founders of Oilwatchdog.org, a
project of the Foundation for Taxpayer and Consumer Rights.
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