Oil giants accused of 'war profiteering'

news.independent.co.uk By Leo Lewis 23 February 2003

Major oil companies including Shell, BP and Exxon-Mobil are facing fierce accusations from Washington of "war profiteering" at the expense of motorists.

As pump prices have soared at filling stations across the US, lobby groups and motoring organisations have slammed oil companies and forecourt managers for "gouging" – using the political climate to charge far higher gasoline prices than the wholesale price justifies. They claim that although crude oil prices last week touched a 29-month high, product prices have risen at a steeper rate.

Now a group of senators are calling for a full Federal Trade Commission (FTC) inquiry into fuel prices and the behaviour of the oil companies in the current environment. Leading the attack is Democrat senator Charles Schumer, who said: "Pump prices are spiking so much that it looks like some wartime profiteers might be trying to make a quick buck." An investigation would target companies like Shell and ExxonMobil that have a large retail presence in the US, and othersthat feed oil products into the system.

The accusations of gouging come at a period of turmoil for the entire oil sector. Brent crude prices have been climbing steadily as the prospect of war has risen, and the strikes in Venezuela have produced some unexpected gaps in the supply side of the industry. Other events, such as Friday's explosion at Exxon's Staten Island depot, have contributed to a mood of intense concern over fuel supplies. US crude stocks were last week revealed to be at the bare minimum, with less than a fortnight's supply left in the inventories – the lowest levels since the 1970s oil embargoes. Freak snow storms on the US east coast have also created a major drawdown in stocks as heating oil demand has surged.

These factors have promp- ted growing calls on the Bush administration to dip into the Strategic Petroleum Reserve (SPR) – a giant store of 600 million barrels of crude oil that is seen by military strategists as the "first line of defence" against disrupted energy supplies. The SPR has only very rarely been used to regulate prices in a non-emergency situation – just three times in the last decade.