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Money in the Tank 

by DOUG NADVORNICK & r & & r & & lt;span class= "dropcap " & M & lt;/span & any years ago, the late psychiatrist Dr. Elisabeth Kubler-Ross developed her now-famous Five Stages of Grief. Dr. Kubler-Ross postulated that people who are facing death (or other major loss) experience these emotions in order: denial, anger, bargaining, depression and acceptance.





Judging from the comments on a Chicago Tribune blog last spring, a reader could infer that many Americans are feeling these emotions as they mourn the loss of inexpensive gasoline. Nancy, for example, appeared to be in the anger phase.





"The rise in gas prices should not be something that the American public accepts sitting down," she wrote. "We have many fellow Americans working hard and striving to make [a] living, often at minimum wage. Big oil companies are raping the Americans by price gouging at a time [when] prices should be leveled."





Angry Driver was in the same stage: "What makes me fume are reports about Americans not really changing their driving habits despite the spike in gas prices. It's because we can't!!! How else am I supposed to get my children to school, buy groceries and get to work?!"





Others on the Chicago Tribune blog appeared to have moved past the early grief phases into acceptance. George opined: "We're never going to see $1 per gallon gas again, so get used to it. The booming economies of China and India will only consume more oil. In a few years from now we will look back on $3 per gallon gas as a bargain, because in a few years we will be paying twice that."





LAWMAKERS LEAP IN


In Washington, D.C., and in Olympia, elected officials are reacting to the anger coming from drivers by promising to look again at why gas prices are increasing. Just last week, the U.S. Senate Commerce Committee approved legislation by Senator Maria Cantwell (D-Wash.) that would allow the Federal Trade Commission to investigate and fine companies if they're found guilty of manipulating oil and gas markets. The legislation would also allow the president to declare national energy emergencies during times when oil supplies are reduced.





"[Gas prices are] higher now than last year or in the aftermath of Hurricane Katrina," wrote Cantwell in a press release. "We need better consumer protections on the books. Gas prices and oil company profits are both at record levels and consumers are left with no way of knowing whether they're being taken for a ride."





Cantwell's legislation is part of a bill that would raise the federal fuel economy standards for all vehicles to 35 miles per gallon by model year 2019.





"The technology already exists to improve fuel efficiency standards," says Senator Dianne Feinstein (D-Cal.), the prime sponsor of the bill. "Raising the fuel economy of the cars and trucks we drive by 10 miles per gallon over 10 years is the simplest step we can take. And it would save nearly the amount of oil we currently import from the Persian Gulf."





That bill may get through Congress (Cantwell is urging passage by Memorial Day, the traditional start of the summer vacation season), but it's not clear whether it would get the signature of President Bush, who has been lukewarm at best about increasing fuel efficiency standards.





In Olympia, state Attorney General Rob McKenna, a Republican, says he is investigating how gasoline is priced in Washington. Why, for example, do Spokane drivers pay the highest prices in the state one year and several cents less than in the Puget Sound region the next year?





"We'll examine the supply and demand conditions in Washington and conduct an initial analysis of regional prices in nine areas," says the attorney general's spokeswoman, Kristin Alexander. "We expect to publish findings from the first phase of this investigation in late July and will share the results during a series of public forums this fall."





Alexander says McKenna has no evidence of gasoline price fixing in Washington but assures that if he finds companies that violate the state's consumer protection laws, he'll prosecute them.





"Consumers need to understand that high prices in and of themselves are not illegal," Alexander continues. "Without direct evidence of an antitrust law violation or an unfair or deceptive act, we have no authority to issue subpoenas or intercede in the market."





SPINNING PROFITS


Like elected officials, oil companies are also reaching out to voters. Conoco-Phillips is downplaying the size of the company's profits on its Website. "The oil and gas industry is one of the world's largest industries, and as a consequence its profits are often greater than many other industries," reads a statement. "However, merely comparing the size of profits among various industries doesn't indicate how profitable a particular industry may be. A more useful tool for comparison is profit margin (calculated by dividing net income by total sales). When this measure is applied, the profitability of the oil and gas industry frequently falls below that of other major industries," such as pharmaceuticals, electrical equipment and computers.





Conoco-Phillips also cites independent sources that it says have cleared oil companies of wrongdoing. You can follow a link from the company's Website to the Federal Trade Commission's 2006 "Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases."





"The FTC found no instances of illegal market manipulation that led to higher prices during the relevant time periods," says the statement, "but found 15 examples of pricing at the refining, wholesale or retail level that fit the relevant legislation's definition of evidence of 'price gouging.' Other factors such as regional or local market trends, however, appeared to explain these firms' prices in nearly all cases."





The Foundation for Taxpayer and Consumer Rights in California says the FTC has let oil companies off too easily. Foundation President Jamie Court says the organization has internal documents from Mobil, Chevron and Texaco that prove the companies reduced their refining capacities in the mid-1990s to reduce gas supply and raise the price at the pump.





"Large oil companies have for a decade artificially shorted the gasoline market to drive up prices," said Court in a September, 2005 press release. The group says it fought successfully to keep Shell Oil from closing its Bakersfield, California refinery that year. "Oil companies know they can make more money by making less gasoline. Katrina should be a wakeup call to America that the refiners profit widely when they keep the system running on empty."





The foundation argues the free market approach for gas pricing espoused by the industry (and a lack of effective government oversight) are the reasons why gas prices in California have become the most expensive in the nation. The group is circulating a petition to the state's lawmakers.





"We urge you to call a special legislative session to debate and take action on the price of gasoline in California," the petition reads. "Prices are at crisis level, and we citizens of your state can't take it any more...Oil companies and refiners are making unheard-of profits from gasoline in our state, with no substantial relief in sight. We urge you to discuss regulatory structures and changes to bring down prices and prevent unreasonable pump-price spikes like the one we are now enduring."





At the national level some are proposing a windfall tax on oil company profits, or at the very least, the repeal of subsidies that were enacted as part of Dick Cheney's energy task force.





BIG FIXES


Investigative reporter Edwin Black thinks the U.S. should move toward a place where even small shifts in gas supply don't cause major fluctuations in fuel prices. Black wants to go back to the old days of automobiles, back to the late-1800s when cars were powered by batteries. In his book Internal Combustion, Black alleges companies that were developing early gas-powered engines conspired with oil companies to ensure that new vehicles were fueled by petroleum, not electricity.





"The powers-that-be thought those original cars were 'girly' cars," says Black. "Those cars were noiseless, easy to use and simple. They wanted cars with a big hand crank, that made more noise and belched out smoke."





A hundred years later, Black believes the U.S. can go back to cars that are quiet and clean by adopting what he calls a "Green Fleet Initiative."





"We need to convert immediately to vehicles that run on compressed natural gas (CNG)," he says. "It's the bridge to hydrogen, which is the fuel of the next generation. We have the technology. Honda makes CNG cars, but only 90 a month because there's no demand. But if the folks with the big fleets -- UPS, Fed Ex, Wal-Mart, taxi cabs, every hospital, university, city, county and transit agency -- said, 'Enough! We're not buying vehicles that burn gasoline anymore,' we could be petroleum free in just a few years."





Consumers, like companies with big fleets, have been slow to embrace new technologies. According to the Associated Press, the sales of gas-electric hybrid vehicles grew from about 200,000 to 254,000 between 2005-06. That's still a small piece of the national car market.





Some, like Neil on the Chicago Tribune blog, have traded in their guzzlers, if not for Priuses, then at least for smaller, more fuel-efficient models.





"I bought a car that gets about 45 miles per gallon, and I consolidate trips when I can," he writes. "The result: my gasoline bill is manageable. When I hear people complain about gas prices as they fill the cavernous tank in their mega-SUV that they 'need' to have, I feel like saying to them, 'you are your own worst enemy.'"





Some, like Michelle Shirts of Spokane, are driving less or with others. "I always carpool now with my friends," she says. "We take the car that takes the least amount of gas. Mostly I just go to work and back."





Some say they're riding the bus more often or walking when they can.





Many, though, will continue to drive even if gas prices hit $4. That's fine with Scott, who writes on the Chicago Tribune blog: "If anything, the gas prices in America are still far too low. If our gas was $6 a gallon or more like it is in most other industrialized countries, no one would be driving gas guzzling SUVs or large cars to begin with. Use public transit, ride your bike, walk, buy a hybrid or a small car. Because these prices are only going to go higher. It's not a crime or gouging. It's the reality of a global market."





Edwin Black will speak on Wednesday, May 23, at 7 pm at Spokane Community College's Lair-Student Center Auditorium.

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