AAA Urges Action on Gas Prices, Inventories
25 February 2000
AAA Urges Action on Gas Prices, InventoriesWASHINGTON, Feb. 24 -- AAA called on the government to do something about rising fuel prices and declining oil inventories which they said are threatening the economy and becoming a serious burden to the average American. "Many motorists cannot afford this drastic rise in gas prices -- the highest since 1990 -- seemingly at the whim of OPEC and other oil producers. But what is of even greater concern to us is the record low level of the nation's gasoline inventory," said Susan Pikrallidas, AAA vice president, public and government relations, in a letter to Energy Secretary Bill Richardson. Industry inventories of both crude oil and refined gasoline dropped to a 20-year low this month, indicating pump prices could move even higher as gasoline demand increases with the beginning of the travel season, AAA said in a letter to Energy Secretary Bill Richardson. AAA recommended that the government not only strongly urge OPEC-member nations to increase production but also to communicate with refiners in this country which are holding gasoline inventories at "rock-bottom" levels. (AAA's letter to Energy Secretary Richardson is follows.) Susan G. Pikrallidas, Vice President, Public and Government Relations of AAA, sent the following letter, dated Feb. 24, to The Honorable Bill Richardson, Secretary, U.S. Department of Energy: The recent parade of truckers here in the nation's capitol to protest the steep rise in fuel prices may well be a precursor to a much bigger and broader national protest of millions of motorists who are feeling the pinch of an average 43 percent rise in gas prices since last February. We would like to request a meeting with you to discuss the current and future situation regarding fuel prices and inventories. Millions of motorists with long commutes are dependent on their automobiles to get to their jobs each day and cannot afford this drastic rise in price -- the highest since 1990 -- seemingly at the whim of OPEC and other oil producers. Refiners that have allowed gasoline inventories to become so low have exacerbated the problem. We were pleased to see that you met with Mexico and with OPEC oil producers to discuss their manipulation of the oil market and urge an increase in production at their March 27 meeting. But what is of even greater concern to us is the record low level of the nation's gasoline inventory. Industry inventories of refined gasoline have dropped to a 20-year low, indicating pump prices are expected to move even higher as gasoline demand increases with the beginning of the travel season just a few months away. We agree with your contention that the Strategic Petroleum Reserve (SPR) was not created to regulate prices, but rather to supply the country if the oil supply is disrupted. However, gasoline inventory in this country has fallen to such a low ebb that unless something is done to ensure that inventories are kept at a more reasonable level, supply could be threatened and pressure to release product from the reserve will be overwhelming. AAA wrote a similar letter to then Energy Secretary Hazel O'Leary in late 1996 asking her to urge refiners to shore up their inventories to protect the nation from unexpected changes that could occur in the marketplace. "By keeping gasoline and oil inventories at such low levels, the traveling public is more vulnerable to the vagaries of the global market," we said then. We're saying it again, because the traveling public is once again vulnerable to the vagaries of the global market. While cognizant of the value of a market system that has resulted in reasonably-priced gasoline over the years, we recommend you not only strongly urge OPEC-member nations to increase production but also to communicate with refiners in this country which are holding U.S. gasoline inventories at rock- bottom levels and contributing to the current economy-threatening price rise - one that is a serious burden to the average American. On behalf of our 43 million members, and all motorists, we wish to know how you plan to address this recurring situation.