US GAO to study refining capacity, gasoline prices

Nick Snow
Washington Correspondent

WASHINGTON, DC, Sept. 26 -- The US Government Accountability Office has agreed to examine relationships between domestic refining capacity and gasoline prices and demand in response to requests from Connecticut's congressional delegation and from US Sen. Charles E. Schumer (D-NY).

GAO received the two requests in mid-May and plans to merge them into a single inquiry to begin later this fall when qualified staff members are available, Gloria L. Jarmon, managing director for congressional relations, said in a Sept. 24 letter to Rep. Joseph Courtney (D-Conn.).

"Our nation's refiners have operated with little oversight for decades and have suffered little recourse for repeated outages and downtime," Courtney said in a joint announcement with Sens. Christopher Dodd (D) and Joseph I. Lieberman (I); Democratic Reps. Rosa L. DeLauro, John B. Larson and Christopher S. Murphy; and Republican Rep. Christopher Shays. "This GAO study may help to spur the necessary oversight to stabilize the oil and gas refining industry and prices."

In their May 18 letter to GAO Comptroller General David A. Walker requesting an investigation, the Connecticut delegation expressed skepticism that deferred maintenance led to reduced refinery utilization early in 2007 and suggested that "a calculated decrease in refining capacity could create an artificial shortage and drive up the cost to consumers."

The National Petrochemical & Refiners Association immediately took issue with the Connecticut congressional delegation's request for the GAO to review refining practices under the premise that they increase gasoline prices.

"Domestic refiners are some of the most highly regulated businesses in the country. Report after report has proven that price manipulation does not occur," said NPRA Executive Vice-Pres. Charles T. Drevna on Sept. 25. "Economists and national editorial pages have even warned Congress against passing so-called 'price gouging' legislation," he added.

"The American public could be far better served if its elected officials would work with businesses instead of against them to craft a sensible and realistic energy policy to protect consumers by keeping supplies stable," he maintained.

Contact Nick Snow at nsnow@cox.net.

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