Washington Secrets

Shippers: Crude costs to blame for high gas prices

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Politics,Paul Bedard,Washington Secrets

Assailed recently by trade groups and even CNBC "Mad Money" host Jim Cramer for jacking up the price of gas, the nation's shipping industry is fighting back, charging that the cost of crude oil and taxes account for 82 percent of the price at the pump.

"The cost of gasoline is not the result of transportation costs," said representatives of the American Maritime Partnership in a letter to House transportation committee leaders.

Cramer and others have recently suggested that gas prices have spiked because of a law called the Jones Act that requires products shipped between U.S. ports be carried on U.S. vessels, which sometimes cost more to operate. The industry claimed that the Jones Act has been the law for decades and never been cited as a reason for high gas prices.

"A small number of misinformed individuals have blamed the increase on American shipping companies," said the industry letter.

They argued that 70 percent of the cost of gas comes from the price of crude and that crude has spiked recently.

"An incredibly complex range of factors impacts the price of crude oil in the global marketplace. Many experts say the recent spike in crude oil prices is tied to more demand in an improving economy throughout the world, particularly in China," said the shippers, adding: "Crude oil, combined with federal, state and local taxes, accounts for 82% of the ultimate price of gas for consumers."

The shippers also noted oil and gas also travel on trucks and in pipelines, not just ships operating under the Jones Act.

"Crude oil and gasoline are transported into and within the U.S. on railroads, pipelines, foreign flag vessels, and American vessels. The price of shipping within the United States is a minimal factor in the overall supply chain. Accusations that American shipping is somehow the cause of the recent spike in gasoline prices are pure fiction. Gasoline prices have increased in every part of the country, even in those regions where domestic vessels play no part in the transportation," they said.

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