Oil firms accused of cutting inventory to boost Midwest prices

CHICAGO -- A nonprofit consumer rights organization released a study Wednesday accusing oil companies of intentionally sending reserves out of the Midwest to create shortages that sent prices higher than $2 a gallon in some parts of the region last summer.

"Pump shock is caused by manipulation of refiners' stockpiles," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, a California-based group that commissioned the report. "And it's foolhardy not to regulate and monitor those more regularly."

The report claims that in a 90-day period last spring and summer, drivers in the states surrounding the Great Lakes paid an extra $374 million for gas.

Oil officials have said they've simply been passing on per-barrel price increases resulting from the Organization of Petroleum Exporting Countries limiting crude oil production. They also have said the price increases happened when they were still adjusting to mandates to create reformulated gas for some parts of the Midwest. That includes ethanol products now required in Chicago and Milwaukee, where prices were among the highest.

But study author Tim Hamilton said OPEC increases would have caused pump prices to rise more uniformly. He also said the companies have had plenty of time to prepare for reformulated gas.

Instead, Hamilton says he found evidence that Midwest refiners sent major reserves to other states and even out of the country before prices spiked in June. He said more than a third of the transfers went to Texas and Louisiana, oil-producing states that already has big reserves. He said imports to the region remained about the same as the previous year.