Thursday, May 20, 2004
Copyright © Las Vegas Review-Journal

Reid: Greed fueling high prices

Nevada senator says oil companies gouging middle class

Sen. Harry Reid Says drilling not the answer

RENO -- As gasoline prices soar to record highs, an industry official in Nevada says it's time to drill for oil in Alaska and off the California coast to help reduce prices at the pump.

But Sen. Harry Reid, D-Nev., is among those rejecting that call, saying the price jump is due more to corporate greed than environmental protections blocking access to domestic oil supplies.

"Big oil companies and refiners are getting rich and middle class families are getting gouged," Reid said Wednesday in a Senate speech.

"Much of the country has been hitting new all-time highs pretty much daily for the last week or so," AAA spokeswoman Jennifer Mack said from San Francisco.

Peter Krueger, state executive for the Nevada Petroleum Marketers and Convenience Stores Association, said drilling off the California coast, in Alaska's North Slope and the Arctic National Wildlife Refuge are "policy and political questions" that need to be addressed.

"I think where we can pump crude oil out of the ground with minimal effects to the environment, we ought to be doing that," Krueger told KOH Radio in Reno. "It is absolutely silly we are relying on foreign crude oil when there is -- at least in the foreseeable future -- plenty of oil off the coast of California and the North Slope. But certain people in this society won't allow us to access it and I think that is a great mistake."

Krueger also said stricter environmental protections have caused higher fuel costs in places where air quality is a problem.

"We as a society have decided we want all these clean air regulations. I think we got them and now we are paying the price for them," he said.

President Bush said Wednesday that if Congress had approved his plan to drill in the Arctic National Wildlife Refuge, "an additional million barrels of oil would have been coming out of that part of the world, which would, obviously, have a positive impact for today's consumers."

Reid said allowing drilling in the refuge "would despoil a national treasure for little long-term gain in energy security."

"It's a simple fact that we cannot drill our way out of this problem. We are sitting on about 3 percent of the oil reserves in the world. ... and we consume about 25 percent of the oil that is produced," the senator said. "Certainly our nation must promote the responsible production of oil and gas. But that doesn't mean we should roll back environmental protections of our priceless public lands to allow drilling."

The average price of gas in Nevada is fifth-highest in the country. California tops the list with $2.31, followed by Oregon and Hawaii, both averaging $2.27.

"It kills us," said Mike Merrill, a drywall contractor in Carson City who said driving to jobs costs him about $50 a day.

Bob Lamkin, owner of Bob's Shell in Carson City for 26 years, said the current price is 19 cents per gallon more than the highest level reached in August last year.

Krueger blames high prices primarily on "uncertainty in the marketplace."

"All the problems we are facing in Iraq are adding to that uncertainty," he said.

Price increases have followed the rising cost of crude oil, he said.

"Not long ago the price for crude oil was in the neighborhood of $30 a barrel. At that time, gas on the street in Reno was maybe $1.60. So with crude oil where it is today ($40), it is a significant increase," he said.

Reid said there's more to it than crude oil prices.

"This outrageous 58-cent increase in Nevada since January has not been driven by the rising cost of crude oil, but by corporate greed and profit," he said. "It's clearly documented that refiner margins have doubled and tripled. The oil companies weren't content to make 25 cents on every gallon of gasoline. They now make 50 to 75 cents for every gallon of gasoline."