FTCR: Bush's 'Oil Price Support' Plan: A Thank You for Big Oil's

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A Thank You for Big Oil's Pre-Election Gasoline Price Drop?
State of the Union Vow to Double Strategic Oil Reserve Will Help Keep Oil,
Gasoline Prices High, Says Group

Two days after President Bush promised this week to double the size of the U.S. Strategic Petroleum Reserve, sending oil prices shooting upward, ConocoPhillips was the first of the Big Five oil companies to report its widely expected drop in fourth-quarter profits. The Foundation for Taxpayer and Consumer Rights said it appeared Bush could have been pumping up oil prices in payback to oil companies that dropped gasoline prices--and apparently their refinery profit margins -- in the runup to the election.

Conoco's fourth-quarter profit drop, from $3.8 billion in 2005 to $3.2 billion in 2006, followed a big October dive in gasoline prices that exceeded the fall in the price of crude oil. That pricing was widely suspected to be deliberate, said the Foundation for Taxpayer and Consumer Rights, taking consumers' gasoline-price anger off the table during the election campaign. (See FTCR's analysis and charts on that profit drop)

The nonprofit, nonpartisan FTCR compared Bush's oil reserve announcement to an "oil price support plan," akin to buying wheat from farmers and burying it in the ground.

"The increase in the strategic reserve will be a gift that keeps on giving to oil companies," said Judy Dugan, research director of FTCR. "The government will buy the oil at market rates for the next 20 years, both adding directly to companies' bottom lines and giving them an excuse to refine less gasoline at higher prices." The 20-year purchase could take an average of about 10 million barrels of oil per quarter off the market, said FTCR.

http://www.consumerwatchdog.org/energy/pr/?postId=7320