WASHINGTON – Like romance or divorce, the explanations offered for spikes in the price of gasoline are manifold: It's the air, it's the mix, a refinery fire here, a Persian Gulf incident there, foreign consumption and, of course, the blockage of the Keystone XL pipeline. Industry analysts talk like Druid priests examining the entrails of a crow.
There are simple constants, though, besides the bites that come out of everybody's wallets that, annualized, make tax cuts meaningless.
One is that both political parties here – other than symbolic protests from “liberal” Democrats – appear willing to go along with whatever Big Oil wants.
Both parties have been looking the other way at a rush to industry consolidation that would make the founder of Standard Oil, the original John D. Rockefeller, blush.
Worshippers at the altar of all things Clinton know that it was President Bill Clinton who opened the most gates to the restructuring of the gasoline business. The near-monopoly status of the Big Five drillers and sellers of gasoline was created under Clinton and his attorney general, Janet Reno.
Of course, Republicans George H.W. Bush and George W. Bush helped. Their careers were partially bankrolled by Houston oil interests. But a report of the nonpartisan Government Accountability Office reported that “in the 1990s,” a euphemism for Clinton, there were 2,600 industry mergers approved by the government.
There were, according to the GAO, eight mergers under George W. Bush. One of these created the largest independent oil driller in the nation. There was little left for Bush to do after Clinton.
As the dawn rose on the Clinton era, there were 22 large to medium-sized oil and gasoline combines. As Clinton's sun set, there were just eight massive ones. You can see the effect in your mind's eye. On busy intersections where once you shopped from four or five sellers of gasoline, there might be one or two. Their prices are identical.
These were the companies whose mergers were completed or begun under Clinton, according to the GAO: Exxon-Mobil, British Petroleum-Atlantic Richfield-Amoco, Phillips-Tosco, Shell-Texaco, Conoco-Phillips and Valero-Ultramar.
The largest five of these earn profits of about $350 million a day. The Federal Trade Commission, founded in the New Deal to be the public's lion against price fixing, is a paper tiger, with its commissioners rotating from presidential campaigns, then into lobbying, then the White House, then into a fat DC law firm. Of the thousands of industry mergers proposed over 30 years, the FTC has blocked just four. Now there's a people's watchdog for you!
As a presidential candidate, Sen. Hillary Clinton, D-N.Y., charged in 2008 – when gasoline cost half of what it does now – that prices resulted from industry collusion, and that the Bush administration wouldn't use the FTC to prosecute. Bill Clinton didn't, Bush didn't and neither does President Obama.
Oil companies, according to the FTC, never conspire or connive against the consumers. Yet with concentration of the industry, gasoline inventories shrink at critical times, and refineries close in the face of soaring demand. Besides, the FTC is not empowered to investigate price fixing in companies that both drill for and sell gasoline, which is the case for all the largest distributors.
Gasoline refining capacity was higher in 1981 than in 2005, after the surge of mergers. And the production of these fewer refineries can drop precipitously.
Democratic politicians have a bag of tricks with which to ply gullible followers when prices soar. They call on the FTC to “investigate,” or demand the release of stores from the U.S. Strategic Petroleum Reserve. No one ever starts a congressional investigation.
Correction: A previous version of this column did not correctly indicate British Petroleum-Atlantic Richfield-Amoco as one of the companies whose mergers were completed or begun under President Clinton, according to the GAO.