Congress pushes to rein in the oil companies

As oil and gas companies prepare to report first-quarter profits this week — estimated to be more than $16 billion — state and federal officials are combating what many perceive as market manipulation and profiteering.

Sen. Dianne Feinstein, D-Calif., introduced legislation this week that would make it easier to keep track of oil-market trading, and House Minority Leader Nancy Pelosi, D-San Francisco, is pushing for a $12 billion reduction in tax breaks for the oil industry.

On Monday, the California Assembly's Revenue and Taxation Committee approved a bill that would tax oil profits greater than $10 million and use the money to help low- and moderate-income seniors pay for prescription drugs.

Meanwhile, Gov. Arnold Schwarzenegger on Tuesday set a goal for state sources to produce 20 percent of California's biofuels by 2010 and 40 percent by 2020. Currently, state sources produce 5 percent of the 900 million gallons of ethanol California uses each year — much of the rest comes from European refineries.

President George W. Bush said Tuesday that he would bring immediate relief to consumers by increasing fuel supply, keeping oil in the marketplace during the busy summer travel season rather than putting it into reserves.

Following Bush's talk, oil prices fell 45 cents, to $72.88 per barrel. Even so, the impact of the President's message is “more psychological than physical,” according to Denton Cinquegrana, analyst with Oil Price Information Service. “At the end of the day, what [pricing] boils down to is, we don't have enough refineries.”

No new refineries have been built in the United States since the 1970s, because the permitting process has become a complicated, multiyear affair. That decreases supply, pushing prices higher, Cinquegrana said.

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