Rather than match demand for gasoline, oil companies are producing less for the U.S. market and exporting more to other countries, while taking increased profits. The result: higher prices at the pump.

 

The national average for one gallon of gas right now is $3.88, and in California, where prices are usually higher than in the rest of the country, the cost is $4.22.

 

Higher prices are the product of the nation’s refineries operating at about 81% of their production capacity, according to the Department of Energy. Over the last 20 years, production at this time of year has averaged 89%.

 

Also, refineries have been sending 15% to 20% of their production overseas for about a year, according to one industry analyst. These amounts are double of what they were four years ago.

 

With gas prices soaring, oil companies’ profits are also rising. ExxonMobil made nearly $11 billion in the first three months of 2011, representing a 69% increase over its performance for the same period last year. BP turned a profit of $7.1 billion and Royal Dutch Shell $6.3 billion in the first quarter.

 

“This is a page torn right out of the handbook of gouge-onomics,” Charles Langley, senior gasoline analyst at the Utility Consumers’ Action Network in San Diego, told the Los Angeles Times. “We call it the law of supply and demand: They supply less product and demand more money for it.”

-Noel Brinkerhoff

 

Oil Companies Are Making More Money and Less Fuel (by Ronald White, Los Angeles Times)