U.S. oil inventories are at an eight year high, proving the claim that gasoline prices are at the mercy of the free market "factually inaccurate" according to Sen. Carl Levin (D-MI).
The Federal Trade Commission said this week it found no evidence of price gouging or manipulaton on the part of major oil companies.
But Senator Levin says his investigations over the years have shown oil companies have schemed to manipulate the supply of oil in order to raise prices. Confidential documents from BP/Amoco show how executives in the laqte 1990's discussed a strategy to "influence the crude supply/demand balance." The plan was to manipulate oil supply by exporting "product from the Midwest" and moving it "into southern Ontario." Another option presented was to provide incentives to a supplier "not to ship into (the) Chicago market."
Senator Levin said the purpose of the strategy was "to artificially constrict supply so that the price would go up." According to Levin, "The market can be impacted and is impacted all the time by the business decisions of the companies that are out to raise company profit."
Industry spokesman John Felmy of the American Petroleum Institute said the scheme may have been discussed, but it was never implemented. Felmy defended the strategy session, saying, "You have to do what's in your interest as a company to try and achieve profitability. That's simply adjusting your product profile to what the market conditions are."
Felmy also says it's misleading to point to the current high levels of crude oil inventories because they only represent a small share of the total supply of oil.