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Fox 11 News: Shell president reveals gas prices high due to supply and demand

09:33 PM MST on Thursday, August 30, 2007
By Delane Cleveland, Fox 11 News

Delane Cleveland’s report Millions of Americans plan to travel this Labor Day weekend, but high gas prices may have a say in how far some people go.

Today, the president of the nation’s largest energy companies tells us why gas prices are so high.

Oil companies have earned record profits over recent years while Americans had to pay more at the pump. Nevertheless, Shell Oil Company President John Hofmeister says that is all due to supply and demand.

This makes alternative energy sources that much more important.

The price at the pump in Tucson averages about $2.57 a gallon, lower than it has been for most of the summer, but still too high in the minds of many drivers.

“It costs me about 100 bucks a month to fill up, so that’s about $400 a month for fuel,” Kris Miller calculates.

It is frustrations like these that bring Hofmeister on a nation-wide tour to talk about issues of energy supply and the need for alternative fuels.

He explains, “By the end of today, we will have used a billion gallons of oil in this country. Think about it, a billion gallons of oil.”

Hofmeister says there is a misconception that energy companies reap the benefits while consumers take a hit.

“All of the profits are going back into the business. We’re not sitting on a mountain of cash somewhere just counting our money,” he reveals.

Hofmeister says that money goes back into developing more energy sources and technology, yet those filling up today say that still does not explain why they have to pays so much to fill up.

Emilie Leder, a University of Arizona student, admits, “I think they’re being greatly benefited off jacking these prices up.”

Hofmeister says prices are based on the supply that is available and the willingness of drivers to pay for it rather than exploring other methods of transportation.

This is something many drivers say they simply cannot consider.

Miller explains, “I’m a contractor and I drive a truck, so I don’t have a lot of choice.”

“I mean, it doesn’t stop me because I just love driving, but when it is $50 to fill up a tank, then I’m done,” Leder reveals.

Today, the Federal Trade Commission released a study saying it found no evidence of market manipulation by refineries and other sellers for $3 a gallon gas prices last summer.

The FTC blames the price hike on increased demand, increases in the price of crude oil and refinery outages caused by hurricanes.

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