Editorial: Investigate increasing oil prices

Oil companies claim that OPEC's decision in March to reduce oil production helped increase prices nationally. What helped account for the West's dramatic rise, according to industry spokesmen, was a decrease in the supply after several refineries had to shut down temporarily. This rings hollow, though, when the situation is examined further.

The Sun's Jerry Fink reported Friday that an American Automobile Association spokesman said that every dollar increase in the price of a barrel of oil translates into a 2.5-cent increase per gallon. In four months, Alaska North Slope crude oil went from $10.15 per barrel to $14.75 per barrel, which should have resulted in just a 12.5-cent hike in gas prices at the pump. "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. And they were able to do that because there was no competition," AAA spokesman Paul Moreno said.

Jack Greco, president of the Nevada Gasoline Retailers Association, has had his share of run-ins with oil companies in the past over what he believes is the major oil companies' stranglehold on the market -- from the refinery to the pump. Greco is sympathetic to the motorists' plight, but he is doubtful that an investigation will bear much fruit. Price fixing is almost impossible to prove, according to Greco, who contends the companies just watch the movement in prices by their competitors and react accordingly. Greco instead believes legislation should be passed that would require oil companies to be regulated in the same way that utilities are, making them justify their price hikes to the government.

Greco may be correct that the federal government will find it difficult to establish that price fixing has occurred, but the government shouldn't just shrug its shoulders and walk away because of the complexities involved in mounting a successful probe. In addition, the federal government should step up its investigation into the increasing number of mergers between oil giants -- what's good for the shareholder of these merged companies could be disastrous for the consumer if it results in fewer choices and higher prices. Until the federal government completes its investigations, or the oil companies relent to public pressure and lower their prices, it could be a long, hot summer if gas prices stay at these extraordinarily high prices.

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