Pounding at the pump

Recent mergers by major oil companies may be fueling the rapid rise in gasoline prices that have hit Southern Nevada and the rest of the country, says Sen. Richard Bryan, D-Nev.

"There have been a series of mergers of colossal giants that are getting even bigger. You're seeing some of the largest oil companies in the world merge with themselves, so you have to wonder what the impact is," Bryan said Thursday.

He wonders if merging is a trend the government should allow to continue if it is a factor in the cost of gasoline.

Among recent mergers have been Exxon and Mobile, British Petroleum with Chicago-based Amoco and French Total with Belgian refiner Petrofina.

British Petroleum also is negotiating to buy Atlantic Richfield Co. (Arco).

On Thursday, Bryan formally requested the Federal Trade Commission to launch an immediate investigation into the skyrocketing price of gasoline in Nevada and other Western states, seeking to find out if there is collusion.

"My gut instinct tells me something is a bit suspicious here," Bryan said.

A spokesman for Arco in Los Angeles, one of the biggest suppliers of gasoline in the West, said the petroleum industry has nothing to hide.

"We welcome the inquiry," Paul Langland said. "We've had various private, federal and state officials look at price fixing in the past. In the last 15 years nothing has generated any sort of evidence that any of the oil companies are colluding to fix prices."

Paul Moreno, a spokesman for the American Automobile Association, said every dollar of increase in the price pf a barrel of oil translates into a 2.5-cent increase per gallon of gasoline.

Moreno said Alaska North Slope Crude oil on Dec. 31 was $10.15 per barrel. On April 12, the price was $14.75 per barrel.

"That translates to a 12.5-cent increase in the price of gasoline," Moreno said.

But the price at the pump has increased as much as 50 cents.

"It's very apparent that refineries still in operation were able to get a lot more money for their product, even though the cost had not increased considerably," he said. "And they were able to do that because there was no competition."

Jack Greco, president of the Nevada Gasoline Retailers Association, cites the 50-cent increase for a gallon of gasoline without an equal increase in the price of crude oil as an example of profiteering.

"Profit is not a bad word, but when it is exorbitant it is," he said. "(The recent increase) exceeds the increase of 30 cents after the invasion of Kuwait."

The Federal Trade Commission is not the only agency being asked to investigate prices that have jumped as much as 31 percent in recent months.

Nevada Attorney General Frankie Sue Del Papa wants Western states to unite in an investigation.

"This problem is bigger than any one state," Del Papa said.

The state's Congressional delegation is calling for investigations on a national scale and on a variety of fronts.

U.S. Rep. Jim Gibbons, R-Nev., has asked the Department of Energy to investigate.

U.S. Rep. Shelly Berkley, D-Nev., wants a congressional hearing, and perhaps legislation that would require oil companies to justify significant rate increases.

"We need to get the attention of the oil companies," Berkley said. "We're looking into a variety of options. One is to propose legislation, or at least begin a dialogue here in Congress, in an effort to let the oil companies know that these sorts of increases are unacceptable and have to be justified."

The regional average price for a gallon of gasoline was $1.55 on April 9, a 36-cent increase since the previous survey on March 19, according to the Los Angeles-based LundbergSurvey.

The average price for a gallon of gas in Las Vegas, according to published reports, is $1.59.

The nation's highest price is in San Francisco, where the average is $1.77.

Del Papa said her office looked at gas pricing three years ago.

"Part of the challenge is that we receive most of our gas from Alaska and California. We have no refineries in our state. That, coupled with the fact that we are at the end of the spigot, contributes to the volatile prices," she said.

She said based upon her experience, states probably will rely on federal agencies to investigate the pricing.

But Greco doubts that an investigation will be productive.

"Normally, what comes out of an investigation is that they are not breaking any laws. Price fixing by an oil company is hard to prove. They don't have to fix the price, they just watch each others' movement. There is no ceiling price on gasoline, no law that makes them report justifying their increases, like utilities do," said Greco. "Really, an investigation won't reap very big rewards. We suggest legislation."

Moreno said the price increases seem to have peaked and may be inching downward in some places.

Langland blamed the increases on these factors:

* A decision by OPEC last month to cut back on oil production to drive up prices.

* Four major refineries being closed for varying periods of time -- one is still closed -- when they normally would be increasing production because of the summer travel season.

"Throughout the world there was an increase in oil price of $5 a barrel over the last several months," Langland said. "More specifically, on the West Coast, we saw, starting about mid-March, a series of unrelated refinery incidents causing four of those refineries to shut down completely or not produce as much.

"All that has caused a tightening of supplies on the West Coast," Langland said.

Langland said between 20 and 30 gasoline tankers from the Gulf of Mexico oil-producing states are making their way to California by way of the Panama Canal to help ease the gasoline supply problem.

"We're starting to see the supply side come back up and to see wholesale prices starting to come down," he said. "Street prices lag a little behind wholesale."

But he doesn't expect them to hit the low the country was enjoying around the first of the year.

"We were seeing historical lows in gas prices," he said.

Nevada had been experiencing the lowest gasoline prices in eight years.

The American Automobile Association spokesman said the West Coast will always have higher gasoline prices than the rest of the country.

"We are isolated from other oil producing regions, such as Texas and Louisiana. There they have plenty of production capacity and distribution systems," Moreno said. "Essentially, we have one gas and oil market east of the Rocky Mountains. Out here, we don't have the luxury of the rest of the country. Our source of oil is half from Alaska, 40 percent from California and 10 percent foreign, which is not OPEC."

The producers and traders also appear to have taken advantage of the unexpected closings of the Northern California refineries to increase their profits, Moren said.

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