Senator Urges Inquiry As Gas Prices Increase

By Larry Rulison, Times Union, Albany, N.Y.

Apr. 19–COLONIE — As gas prices in the Capital Region climbed ever higher Tuesday, Sen. Charles Schumer called on the Federal Trade Commission to investigate supply manipulation by the large oil companies.

As of Tuesday afternoon, the average price for a gallon of regular unleaded gasoline in the Capital Region was $2.91, up nearly 3 cents from Monday and up more than 39 cents from a month ago, according to AAA. A year ago, regular unleaded was selling for $2.297 a gallon on average.

The national average for regular unleaded was $2.79 a gallon on Tuesday, according to AAA.

The price of crude oil, which makes up almost 60 percent of the price of a gallon of gas, also shot up past $71 a barrel on Tuesday, a record level.

In a conference call with reporters Tuesday, Schumer, D-N.Y., said big oil companies were artificially propping up the price of gas by taking more time than is normal to switch their refineries to making summer blends of gas that cut down on smog.

He claimed that just a few weeks ago, U.S. refiners were at just 85 percent capacity compared to the typical 90 percent. Schumer shared a letter with reporters that he said was sent Tuesday to the Federal Trade Commission, asking the agency to investigate refining capacity.

“This is just devastating,” Schumer said. “We have to keep a careful eye on the gasoline companies.”

FTC spokesman Frank Dorman said he was not aware of the letter and that a response typically takes months because “a lot of analysis and careful thought” goes into any investigation.

The National Petrochemical & Refiners Association in Washington, D.C., swiftly issued a statement Tuesday explaining that 3 percent of the nation’s refining capacity is still off-line because of the Gulf Coast hurricanes and a serious accident that occurred at a Texas refinery last year.

NPRA President Bob Slaughter said in a statement that the industry “is hard at work doing its job — providing a steady supply of petroleum products for the nation’s consumers — even under difficult conditions.”

Meanwhile, consumers in the Capital Region were feeling the price pinch.

On Tuesday, Peter Tarnowski of Troy was at the Hess station on Route 9, just north of Route 155 in Latham, filling his tank.

“It’s outrageous with the prices going up,” the 80-year-old retiree said.

Like other customers, Tarnowski was drawn by cash prices that are 6 cents less per gallon than those charged on credit purchases. For instance, the cash price for a gallon of unleaded regular was $2.89, compared with $2.95 for those who paid with credit.

Across the street, the Getty station was charging $2.93 for a gallon of regular, regardless of cash or credit.

Mario Pennacchia, the owner of the Hess station, said he has been offering the cash-or-credit price to customers for a “couple of years” and that the spread is typically between 4 and 7 cents. He said the reason for the two prices is that the profit margin on a gallon of gas sold by a retailer like himself is 8 cents, while a credit transaction costs him 10 cents.

“How do I not go out of business?” he said.

Pennacchia said most gas retailers that charge one price for cash or credit are factoring the cost of credit transactions into the price for everyone, even if they pay in cash. He said he’s only providing an incentive for people who pay in cash by offering a lower price for the purchase.

“I believe in doing the right thing,” he said. “I’m a little guy in a big pond.”

—–

To see more of the Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com.

Copyright (c) 2006, Times Union, Albany, N.Y.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.