OPEC is sick of US refiners kicking sand in its face. As gas prices rise, refinery operators like Exxon (XOM) and Valero (VLO) are taking a bigger cut of the pie and the oil producing countries are taking less.
While gas prices at above $3 which is an all-time high, the price of crude, at about $65 is not. So, someone is getting a little extra off the top.
OPEC’s solution is simple. It is not going to increase supply to hold down prices as it has in the past. It wants to get its share of the revenue on each gallon of gas. It the US government and consumers want lower gas prices, they should talk to the head of Exxon.
As The Wall Street Journal points out: "crude-oil prices on the New York Mercantile Exchange have risen 5.1% so far this year, gasoline prices have surged 47%."
It would not be surprising if all of this ends up in front of some Congressional committee. With the election around the corner in 2008, representatives do not want to have to go to voters and say there is nothing they can do about gas going to $4. And, Congress has little leverage with OPEC, but it could try to set limits on refining profits, tax their profits and drop the federal tax on gas, or simply cap how fast gas prices will rise.
None of it is good news for refiners, but they have had a good enough year so far to make up for it.
Douglas A. McIntrye
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