Gas prices rise as Summer arrives and (typically) oil companies don't explain why

Here we go again. As we move into warmer, vacation weather, gas prices have steadily risen over the last month. In fact, last week the average price of gasoline in the U.S. set a record of $3.10 dollars per gallon, according to the Energy Information Administration.

This same energy association feels that prices will remain seasonably high for the next three months.

This scenario is predictable and happens every year. Contrary to what seems like a common sense supply and demand reason (Americans drive more when the weather is nice, so the industry raises prices because it can and we have little recourse), oil executives have tried in vain to explain away the fee hike as something different. They claim it is an anomaly that reflects a temporary drop-off in refinery activity, partly because of scheduled maintenance and partly because of unscheduled interruptions. On top of that come ethanol prices, which have soared, because refiners now blend a small percentage of ethanol into standard gasoline, yada, yada, yada.....

Do you understand that explanation? Congress certainly doesn't because a bunch of high profile senators are lining up to take whacks at the industry. On May 9th, politicians held a press event in front of an Exxon station on Capitol Hill to vent their outrage. Now, a number of Senators are sponsoring gas "gouging" legislation that is aimed to stifle the industry's ability to enhance profits through retail hikes. Bill language includes some seriously negative clauses such as "the sellers are exploiting market conditions through unconscionably excessive increases."

All of this public furor only helps to create more confusion, anger and a new level of mistrust (if that is even possible) with consumers.

This has become tiresome. Big oil has yet to learn how to unite and speak as one industry (which is ironic because the industry has mastered how to do this on the lobbying front). Its explanations are not digestible with consumers and it does a lousy job of proactively staying in front of critical issues (like this) and communicating any sort of consistent positioning that will resonate with those that matter most.

Some would argue that the industry doesn't communicate well because profits are the only thing that matter. Thus, there is nothing real or positive to speak about. If that is the case, I would tell the industry that it better change strategies quickly and demonstrate a tad more consumer care. Last year, Big Oil was pummeled by Congress' three ring media circus for record increases at the pump. And, baseball, insurance, Wall Street and every other industry that has been publicly vilified by Congress learned the hard way and always ended up backing down after much humiliation and financial cost.

It's time for this industry to understand that being reactive to these issues will further cement a negative image that will eventually impact profits. My bet is that “eventually” isn't too far away.

Comments

[dakotatycoon]

Short of this passing. bring back price controls. but this time put the controls on the wholesale not retail prices. Plus I'd like to see the big three broken up. It's "Standard" oil all over again. One more IMPORTANT thing. Place a LIFETIME ban on any executive of any oil company from EVER owning or working for any alternative energy source. These people had thier chance and raped the American public. We know your character. Lets have some new talent.

Texaco/Cobysis/NiMH/lawsuit = no more batteries for Rav4's,EV Rangers or EV!'s. Solution? NO MORE TEXACO,EXXON,BP!!!! Big oil needs to die when oil does. They MUST not be allowed to continue to control energy!!!!!