Big Oil's earnings statements read more like a confession than a profit report.

As North County's gas prices edge toward $3.50 a gallon, consumers should know that gasoline now costs 11 cents more than it did last year when oil was selling for $11 more per barrel. For example, on Thursday, the North County Times reported that the average price of gasoline was $3.41 a gallon. Meanwhile, the price of oil was $63 a barrel. On the same day last year, the price of oil was $74 a barrel, and gasoline cost just $3.30 a gallon (source: U.S. Department of Energy).

Something is terribly wrong when oil prices drop and the cost of gas goes up. Big Oil says it is all about "supply and demand," but the ugly truth is that North County residents are getting gouged deeply. Here's why: An $11 decrease in the cost of oil should mean a price cut of 26 cents from last year's price of $3.30 a gallon. The industry says it "struggles" to keep up with demand for gasoline, but according to the California State Board of Equalization, gasoline demand in the last half of 2006 was 1 percent lower even though there are more drivers on the road. While the report does show a 1 percent bump in gasoline consumption during January 2007, the cost of gasoline in North County averaged $2.53 a gallon -- almost a dollar less than it does now.

What has happened is that the oil companies have shifted their profits centers from the "upstream" sector (oil and drilling) to the "downstream," which is refining. In the meantime, retailers are limited to an average profit of about a nickel a gallon.

Last week, Big Oil's first-quarter profit reports came rolling in with more bad news for consumers. On April 26, Exxon/Mobil reported that even though it produced less product than last year, it earned profits of 10 percent on unusually high refinery margins (source: MarketWatch) and that the margins were so high that the company "overcame lower crude oil and natural gas prices" (source: Associated Press).

The following day, April 27, Chevron joined the obscene profit bandwagon by announcing that it earned first-quarter profits of 18 percent, much of it on increased refining margins, even though the company produced less gasoline than last year (source: Associated Press, International Herald-Tribune). Meanwhile, Valero announced that it made the highest first-quarter profits in the company's history. Valero Chairman Bill Klesse said longer downtimes for planned refinery maintenance helped create the shortages that reaped record-shattering profits (source: San Antonio Business Journal). And on Thursday, Shell announced that despite "unusually low seasonal gas demand," that "better refining margins, particularly in the U.S. West Coast," drove profits sharply higher (source: MarketWatch.)

Bottom line: These aren't "profit reports," they are confessions.

Exxon didn't "overcome" low oil prices, as the reports suggest. It gouged its way to higher profits due to an almost complete lack of competition at the refinery level. And so did Chevron, Shell and Valero. They did it by restricting supply, panicking the markets, and intentionally underproducing gasoline.

Charles Langley is a gasoline analyst for UCAN, the San Diego-based Utility Consumers' Action Network. He also collects gas-price data for the North County Times. He edited UCAN's free 32-page guide, the "Guzzler Buster: 127 Secrets to Squeezing More Miles From Each Gallon." UCAN's "Guzzler Buster" is available free of charge to San Diego County residents who visit the UCAN Web site at www.ucan.org.