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The gas hike blame hunt
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January 7, 1997: 8:00 p.m. ET
AAA blames low inventories, while oil companies point to marketplace
From Correspondent Alan Dodds Frank
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NEW YORK (CNNfn) - There is no disputing that gasoline prices are up sharply from a year ago, but the cause of the increase is not so clear.
The American Automobile Association, blames the rise on low inventories, while oil companies and analysts point to an unexpected increase in demand from the world marketplace.
"Crude oil prices are up like $5 to $6 from a year ago, and that equates to around 15 cents a gallon, and gasoline pries at the pump are up 15 to 16 cents a gallon," said Sal Ilacqua, an oil analyst at Rothchild.
AAA says the price hikes are a result of the lowest crude oil and gasoline inventories held by the major oil companies since the Arab oil embargo of 1973-74.
The AAA stops short of advocating government intervention, but it urges oil companies to increase stockpiles voluntarily.
The oil industry, meanwhile, says the free market is the best way to control prices, and scoffs at suggestions that the Energy Department take action.
"I think they have taken the correct position, which is to say that the consumer is better off relying upon the market," said Ed Murphy, director of accounting and statistics at the American Petroleum Institute.
But William Berman, director of environment and energy at the AAA, believes the oil companies are manipulating the market and said that decision could back fire if refineries shut down this winter or violence flares up in the Middle East. The oil companies then might not have enough oil to sell. (188K WAV) or (188K AIFF)
What can consumers do? Not much.. Traditionally, prices at the pump go down after the summer driving season. But that isn't happening this year. Indeed, AAA says to expect prices to go even higher before they begin to fall. 
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