The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

"Gasoline shortage?
Close another refinery!"

Apr 19, 2004

Gasoline prices in the whole country are at unprecedented highs – on April 12 the average pump price for self-serve gasoline was $1.79 per gallon, a new record. In California, at $2.16 on the same day, the prices were higher than anywhere else – as they have been for the past eight weeks.

Oil companies say it's because there is a shortage in the gasoline supply. When supply is short, prices rise. But why is there a shortage? The companies name their usual list of culprits – "high OPEC prices" (that is, the Arabs!) and "tight environmental standards" lead the list.

Of course, the oil companies are not eager to discuss the real reason for the supply shortage. In fact, they have caused it themselves, deliberately, so that the prices – and their profits – go through the roof!

In California, five companies produce 90% of the state's special CARB gasoline. In the past two decades, these companies have been closing down refineries – despite the continual increase in the population and the demand for gasoline. In 1983, there were 37 refineries producing CARB fuel; today there are only 13.

This strategy has been working for the oil companies, which are running record profits – Wall Street calls the situation in California "refinery heaven." And it's been working so well, the bosses want to do more of it: Shell Oil has announced that, on September 30, it will shut down its Bakersfield refinery for good!

Shell gave some lame excuses for the closure – the refinery losing money, nearby oil fields running out of reserves. But consumer groups had no difficulty exposing these as blatant lies. According to Shell's own documents, the Bakersfield refinery had the highest profit margins among Shell's eight U.S. refineries last year. And state officials have confirmed that the oil fields in question still hold at least 20 years' worth of crude oil.

The oil companies are doing exactly what the electricity companies did in 2000 and 2001 when they shut down power plants, causing the electricity prices to skyrocket in California.

Once again, the bosses are trying to shake us down for the last penny in our pockets, by manipulating the supply of a vital necessity.

That's capitalism at work!