Pain at the pump

While politicians duke it out over the gas crisis, local working
people get slammed
General contractor Tom Chargin is not a happy camper and, in
fact, won’t be taking his family on the yearly camping getaway any
time soon.
”
Let’s just say our ski vacation in Aspen has been curtailed,
”
laughs the father of two pre-schoolers.
Chargin, a resident of Gilroy, runs a small company and crew
that specializes in remodeling and additions
– jobs that take them to all points in the South Bay, including
Hollister, Santa Cruz and San Jose. To get to his clients, Chargin
drives a one-ton diesel truck loaded with materials and tools. And
the cost of diesel fuel is hammering his business.
While politicians duke it out over the gas crisis, local working people get slammed

General contractor Tom Chargin is not a happy camper and, in fact, won’t be taking his family on the yearly camping getaway any time soon.

“Let’s just say our ski vacation in Aspen has been curtailed,” laughs the father of two pre-schoolers.

Chargin, a resident of Gilroy, runs a small company and crew that specializes in remodeling and additions – jobs that take them to all points in the South Bay, including Hollister, Santa Cruz and San Jose. To get to his clients, Chargin drives a one-ton diesel truck loaded with materials and tools. And the cost of diesel fuel is hammering his business.

“My business is dying because I can’t afford gas,” Chargin said, speaking from a remodel job in Santa Cruz. “My workers are whining for more money because of their gas cost, but the bids are already set.”

Gas prices have doubled in the last four years, says the Automobile Association of America. Yet it’s the same old story when it comes to Big Oil windfalls. While Exxon Mobil reported record profits for last year, followed this week by a record-breaking $8.4 billion for this year’s first quarter, Chargin and others in his predicament aren’t clapping for the corporations’ good fortunes.

Many hard-hit motorists and small business owners lay the blame on the greed of big oil corporations. But Chargin places it at the Bush administration’s doorstep.

“The Supreme Court don’t come cheap,” said an agitated Chargin. “They’re calling in the markers. With all of [President] Bush’s oil connections, if they can’t get the price of oil down then something’s up. They named an oil tanker after Condoleeza Rice, for Christ’s sake. I think some people are getting supreme pay-offs.”

Political jockeying abounds

To be sure, politicians at every level are scrambling to appease constituents over the gas crisis during this election year.

But to Chargin and others whose businesses are hurting, they are failing miserably.

Industry pundits have said that Big Oil corporations have reaped such huge profits in the past year, they don’t know what to do with the money. Exxon-Mobil, the nation’s biggest winner at $25.3 billion last year, just gave retiring CEO Lee Raymond a $400 million golden parachute, and other companies are seeing huge gains as well. Chevron Corp. based in San Ramon, announced last week first-quarter profits soared 49 percent from last year’s, to $4 billion.

As long as there are no rules against making such profits – in an era where a limited number of domestic oil companies control supply at the expense of the public – there is no stopping the snowballing price at the pump, said Sean Comey, spokesman for AAA Northern California.

“If you’re a big gas company, and you’re selling the same amount for $3 as you did for $2, what would you do?” Comey asks rhetorically.

Comey believes the public’s feelings of hopelessness on the issue are part of what fuels the greed of Big Oil.

“Believe me, the people who are making record profits are very well aware of this,” he said.

On the federal level, President Bush has called for more tax incentives for hybrid cars, the ability to go over Congress to raise mileage requirements on cars and, again, drilling the Arctic National Wildlife Refuge. Conversely, he refused to go along with a plan to curb the $80 billion in tax subsidies handed to the oil companies. It all comes on the heels of Bush’s cheer for hydrogen-fueled vehicles to cure America’s “addiction” to foreign oil.

The suggestions, especially the last, frustrate Tom Chargin.

“I really have a hard time believing this guy can’t pick up the phone and call his oil buddies,” Chargin said. “This hydrogen fuel thing is slight of hand. And Bush isn’t the first to bring it up but none of these guys have the balls. They aren’t going quietly into that good night. And to mention it is an insult to our intelligence.”

Bush’s most touted plan this week was the announcement to lower clean fuel requirements for refineries. Environmentalists howled over the move, while Congressman Sam Farr (D-Monterey) openly attacked it.

“President Bush called rising gas prices a ‘hidden tax on working people,'” Farr said. “Hidden? I think it’s been pretty obvious to everyone how rising gas prices affect all of us – except maybe to the President. And now the President says he’s going to help lower gas prices by waiving clean fuel requirements? So we might save a few pennies at the pump while sacrificing our health in the long run?”

A plan floated by Senate majority leader Bill Frist to give $100 gas rebates to most taxpayers was shot down this week. Even right-wing talk show host Rush Limbaugh called it an attempt to buy off consumers.

Tyson Slocum, co-director of the Public Citizen’s Energy Program who was interviewed recently on national radio, said it’s the politicians who are bought: Republicans who control Congress received 81 percent of the $54 million dollars in political campaign contributions made by big oil companies since 2001.

Late last week, Attorney General Bill Lockyer announced the filing of a lawsuit that challenges the Bush Administration’s new fuel economy standards, which Lockyer said fall so short of what’s necessary they actually contribute to higher prices and even global warming.

“President Bush is making empty promises to Americans about fuel economy,” Lockyer said. “He wants Congress to give him authority because he will increase gas mileage in cars, but he has failed to set meaningful increases for gas-guzzling SUVs and light trucks.”

Nine other states are joining in the lawsuit, including New Mexico, New York, Oregon, Maine and Massachusetts.

Hard work hassles

Richard McAbee, owner of McAbee Trucking in Hollister, doesn’t blame the politicians as much as he does the oil companies. When he heard from a friend that a former Exxon CEO received a $400 million retirement bonus, McAbee was disgusted.

“If he’s retiring, what’s he going to do with $400 million?” McAbee asked incredulously.

Several years ago, McAbee ran two trucking yards and a fleet of 50 trucks to haul liquid fertilizer to farms from Sacramento to Fresno, to King City and the great Salad Curtain of the Salinas Valley.

He’s down to 14 trucks now, in part, to better manage his company. But the rising cost of diesel is having a crippling affect on his bottom line. Three years ago, McAbee spent $7,000 a week on fuel. Now he spends $25,000 a week for diesel, with less than one third of the fleet he used to manage.

Once cheaper than regular gasoline, diesel has skyrocketed. It now costs about the same as premium gasoline.

When the gas crunch started in earnest after the Katrina catastrophe last year, McAbee said his company absorbed the added fuel costs – for about six months. He finally started jacking up his fuel surcharges, albeit reluctantly.

“By the time you pass it on, it’s affected everybody,” McAbee said. “Everything costs more now. You see it in the grocery store.”

Chargin, the Gilroy contractor, is well versed in the problems with diesel. Recently, the cost of the black gold was never so obvious when, after not filling up his work truck for lack of the full $100 to fill the tank, Chargin ran out of fuel on the road when he couldn’t locate a diesel station. When a diesel vehicle runs out of fuel, it has to be towed to a mechanic and the fuel system has to be vacuumed out.

“I was in Hollister and miscalculated,” Chargin said. “I have to juggle bills, decide if it’s worth going to a client’s house, whether it’s worth it to go and buy the gas.”

McAbee said he’d like to see the gas tax abolished. Of the $3.22 he pays for a gallon of diesel, 63 cents of that is tax.

“It’s hard for everyone because of the cash flow problem,” McAbee said.

The great equalizers

AAA’s Comey, who said he’s familiar with the San Benito/South Valley and Fresno areas, believes there is a bitter irony for commuters who have managed to find affordable housing in, say, Los Banos. Since many commute from the Central Valley to the Central Coast and back again, what they saved in housing costs they are now spending in gas costs.

“So they’ve traded a lower mortgage for a skyrocketing gas bill,” Comey said.

Political backbiting goes on, much to Chargin’s contempt. As he watches congressmen on the nightly news continue to distance themselves from their oily patrons, the gas gauge will continue to fall and the oil companies’ profits will continue to soar.

“My take is that [Bush and Cheney] are getting a little kick-back now, for all they’ve done for the [oil] industry,” Chargin said. “With the amount of money we spent on the Iraq war, they could have weaned us off. For $300 billion, we could have been on an alternative by now.”

The Sierra Club compiled a list of gas facts, published just before Hurricanes Katrina and Rita hit last year:

RECORD OIL DEPENDENCE

58% Total U.S. dependence on net imports of foreign oil in 2005, up from 44.5% in 1995. (Energy Information Administration)

25% The percentage of world oil production consumed by the United States (EIA)

3% Percentage of world’s oil reserves located in the United States (EIA)

130,000  Additional barrels of oil consumed per day by the United States as a result of the energy bill extending loopholes for the auto industry that weaken federal fuel economy standards.

RECORD PROFITS

$25.3 billion Exxon Mobil’s record-setting profits in 2004

$3.4 billion Fourth-quarter 2004 profit for Chevron-Texaco Corp, double the profit for the same quarter of the previous year.

218% Exxon Mobil profit increase 2004

145% ConocoPhillips profit increase 2004

51% Shell profit increase 2004

39% ChevronTexaco profit increase 2004

35% BP profit increase 2004

RECORD TAXPAYER GIVEAWAYS

$80 billion: Total money (tax breaks, direct spending, and authorizations) currently in the energy bill conference report – the majority of it going to polluting energy industries. $66.3 billion in authorized spending, $11.68 billion in the tax package, and $2 billion in the Administration’s new nuclear risk insurance provisions. (Taxpayers for Common Sense – www.taxpayer.net)

$3 billion: Cost to taxpayers to conduct an invasive oil and gas inventory along the Outer Continental Shelf even though these coastal areas are currently under a decades old drilling moratorium.

$0: Total royalty payments from the oil and gas industry for deep water exploration on public lands and for oil drilled areas off Alaska’s coastline since the energy bill allows the industry to forgo royalty payments for these activities. 

RECORD CONTRIBUTIONS

$52.3 million:  Amount the oil and gas industry contributed to political candidates in 2004. (Center for Responsive Politics – www.opensecrets.org)

$314.4 million:  Amount the energy and natural resources industries spent on lobbying in 2003 and 2004.  (Bloomberg News)