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Los Angeles Times
Sep 02, 2005 - 01:00 AM

by Steve Lopez, Points West

A Snappy Retort, but No Relief at the Pump

Trish Lester, a singer/songwriter who drove to a Los Angeles recording studio Thursday morning from her home in Newhall, was aghast but not surprised by what she saw at gas stations along the way.

"One place was $3.27 a gallon," she said. "You drive down the road, and you can see people going up and raising the prices on the sign."

When Lester saw $3.09 for Arco premium at Riverside and Fletcher in Silver Lake, she pulled in to top off the tank of her 10-year-old Lexus, fearful that it's only going to get worse. A fill up of 10.9 gallons ran her $33.85.

Hard to imagine that someone would feel lucky to find gas at more than three bucks a gallon, but that's where we are today after a steady rise in prices all summer, followed by a jump after Katrina knocked out oil operations in the Gulf of Mexico.

President Bush, having just completed a long vacation, offered sympathy this week, but no solution.

"I wish I could just snap my fingers and lower the price of gasoline for you," he said on a Western political photo-op tour. "The markets don't work that way. I'd be snapping if I could do it."

Apparently he can't deliver fast and effective federal disaster relief, either, perhaps because the National Guard is in Iraq and the president was busy sunning himself in San Diego while bodies floated in the muck of New Orleans.

Gov. Arnold Schwarzenegger, whose political machine is lubricated with more than $700,000 from the oil industry, had much the same thing to say this week about pumped-up gas prices.

"It's supply and demand," said the Hummer-driving governor, who doesn't need to worry much about the price of gas. "If there is a lot of demand, the prices will go up. It's just one of those unfortunate things."

That's the way it always is with gas prices. Nobody can do anything, Republican or Democrat. As they always tell us, the petroleum market is a very complicated animal. Yeah, sure. Electricity markets were hard to understand too, until Enron.

Inside the Arco station where Lester was filling up ¿ and where I usually find the lowest prices in my neighborhood ¿ a clerk told me the price had just shot up 10 cents in 24 hours, but he was too low on the totem pole to say anything about it. But Lester didn't hesitate.

"It always strikes me how quickly retail responds when a barrel of oil goes up," she said. "I don't understand this instant increase at the pump."

At the Chevron just south of Echo Park on Glendale Boulevard, regular was $3.03, and Robert Nila, an administrative assistant at an investment company, was topping off. The bill ¿ $7 for 2.3 gallons.

"I just hope the oil companies aren't fixing the prices because of the hurricane," Nila said. "They always seem to take advantage."

The profiteering was actually well underway before Katrina, according to Jamie Court of the Foundation for Taxpayer and Consumer Rights. He claims that the oil industry manipulates the market by keeping gasoline production low so prices will stay high.

"Katrina will only increase the probability of profiteering and should be a wake-up call to legislators," said Court, who called for a consumer rebate to kick in during times of windfall profits that result from price gouging.

State Sen. Joe Dunn (D-Santa Ana) heard a wake-up call earlier this week and introduced legislation that would give the Public Utilities Commission the authority to control profit margins and require mandatory reserves.

Naturally, it's an idea that sends oil industry reps into apoplectic fits, and they helped crush a nearly identical bill by Dunn two years ago. As Western States Petroleum Assn. spokesman David Fogarty told Associated Press, Dunn's legislation doesn't take into consideration the unfixed cost and availability of crude, California's high gas tax or the cost of the state's required pollution-control blend of gasoline.

But Dunn, who points to oil industry profits of $23 billion among the four largest oil companies in the first three months of this year, doesn't want to hear about it.

"What the gas industry has said is, 'We have a supply problem.' Yes, it's true¿ but it's due to a deliberate strategy by this industry to eliminate competition out of the market and therefore allow the industry to charge any price it wants. The real problem we have isn't Katrina, it isn't Iraq, and it isn't oil refinery fires. It's the fact that we do not have competition in the gasoline market," he said.

There's a little more to it than that. When I met Lester as she pumped $3.09 premium at the Silver Lake Arco, she told me to call her dad, Bill Brown, who studied the international petroleum market before his retirement from a think tank called the Hudson Institute.

You can't blame the oil companies for making money, Brown said. That's what they're in business to do, and when an event like Katrina reduces supply in one region, it affects prices everywhere because petroleum is an international market.

But if Bush wasn't a product of a family made rich by oil, Brown said, he might be more inclined to side with working stiffs hit hard by skyrocketing gas prices.

"It's the people versus the oil industry," Brown said, "and he's on the side of oil."

So are people who drive around in cars the size of Yosemite's Half Dome, and for their sake, part of me delights in the possibility of gas hitting $4 a gallon. But as Brown points out, the president could have moved faster to tap the national petroleum reserve instead of keeping a lid on it as prices soared and oil execs smiled like thieves. And he could have led a national conservation campaign that demanded better fuel efficiency from auto manufacturers, a lobby that has bought off politicians of both stripes and turned regulators into lap dogs.

Brown called Bush's recent push for gas mileage improvements ¿ a plan that exempts Hummers, if you can believe that ¿ "a tiny political gesture, but far from what could be done."

That's a kind assessment, given the fact that American soldiers are dying in a war that is at least partly about access to oil.

If only we could snap our fingers and get them home before gas hits $5 a gallon.
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Read previous columns at http://www.latimes.com/lopez




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