"With the U.S. economy at a tipping point, a 14-cent jump in gasoline over a single week signals a spike that will empty consumers' pockets during the holiday season. It's not hard to imagine $4.00 a gallon early next year."
FTCR noted that the major oil companies' third-quarter profit dips were an anomaly, pushed by Congressional threats to cut their subsidies and cap their profits. An unexpected dip in summer gasoline usage, linked to record pump prices, also increased supply and put downward pressure on outlandish refinery profits, said FTCR.
"Now, with energy bills stalled in Congress and excess supply wrung out of the system, oil companies are back on track to profit not just from record crude oil prices, but from newly rising refinery margins," said Dugan. "At the same time, Big Oil will keep receiving billions of dollars in federal subsidies and faces no threat of rising royalty payments."
A federal judge in Louisiana last week rejected the government's attempt suspend federal tax incentives and collect an estimated $60 billion in oil company royalty payments on Gulf of Mexico crude oil. The judge agreed with the oil companies that the government may not suspend tax relief on oil drilled from public waters just because crude oil prices have risen far above the cost of production. If the Louisiana judge's ruling holds up, another possible brake on oil profits, at the expense of taxpayers and motorists, will be removed, said Dugan. "As the U.S. economy struggles even to keep moving forward, Big Oil's foot is flat on the accelerator again."
