Gas Price Gouging

FTC to look at alleged gasoline price gouging

WASHINGTON - U.S. Senator Charles Schumer announced that the Federal Trade Commission (FTC) has granted his request and will begin an immediate investigation into U.S. oil refiners who may be responsible for continued high gas prices. Recent reports suggest that refiners have cut back on gasoline stockpiles in an effort to decrease supply and inflate the price of gas at the pump. The Energy Information Administration initially released data showing that refiners are operating at just over 80% of their capacity, which translated to a decrease of 900,000 barrels per day when compared to 2010 output levels. Since last year, refiners’ profits have more than doubled. While crude oil prices have come down in recent weeks, the average price of regular unleaded gasoline has remained elevated. Schumer noted that gas prices skyrocket up right alongside the price of crude oil, but the decrease in oil prices has not translated into substantial drops in the price at the pump.

“The FTC is doing the right thing in opening an investigation into practices that could be responsible for the continued high gas prices that are draining New Yorkers’ bank accounts,” said Schumer. “It’s high time we get to the bottom of this. If the FTC finds that refiners, oil companies, or anyone else is responsible for price manipulation to pad their own pockets, I expect the appropriate authorities to act swiftly.”

In their letter to Schumer, the FTC states that they will investigate, “whether certain oil producers, refiners, transporters, marketers, physical or financial traders, or others (1) have engaged or are engaging in practices that have lessened or may lessen competition – or have engaged or are engaging in manipulation – in the production, refining, transportation, distribution or wholesale supply or crude oil or petroleum producers; or (2) have provided false or misleading information related to the wholesale price of crude oil or petroleum producers to a federal department or agency.

Gasoline price gouging complaints spur Kentucky, Maryland ...

Kentucky : Attorney General Jack Conway filed a motion  last week seeking a temporary injunction to force Marathon Petroleum Co. to return its gasoline prices to April 26 levels, the date the state’s Governor declared a state of emergency due to flooding. From WLKY.com :

Attorney General Jack Conway accused Marathon of illegally raising the price of wholesale gasoline during a state of emergency due to flooding.

 ”The governor issued his emergency order on April 26 which put into place Kentucky’s price gouging law that says you can’t gouge on building supplies, you can’t gouge on hotel rooms and you can’t gouge on gas prices. Specifically we’re alleging they’re charging prices not based on their costs but instead based on their speculation,” Conway said.

… Conway wants an order forcing Marathon to roll back its wholesaler price to what it was before the emergency declaration.

On Monday a Kentucky judge declined to issue a restraining order against Marathon, saying he needed additional information. A hearing is scheduled for today. The motion was filed in Kentucky’s on-going price gouging case against Marathon, initiated in 2007 in response to gasoline pricing complaints post-Hurricanes Katrina and Rita in late 2005.

Kentucky law prohibits selling certain goods and services, including fuels, “for a price which is grossly in excess of the price prior to the declaration [of a state of emergency] and unrelated to any increased cost to the seller.”

Marathon claimed politics, as Tuesday this week was the state’s primary election and AG Conway was on the ballot; Conway dismissed the claim, saying he was unopposed in the Democratic primary. (Marathon noted that the 2007 case was filed by then Attorney General Greg Stumbo less than two weeks before the 2007 primary election in which Stumbo was seeking the Democratic nomination for Lt. Governor.)

In addition to the price gouging claims, the AG’s office has been pursuing an anti-trust investigation of Marathon. Coincidently, reports WHAS11 news , “Also Friday, the Kentucky Attorney General’s office announced it has completed its three year investigation of the 1996 merger of Marathon Petroleum with Ashland Oil.   Kentucky will forward the findings to the U.S. Justice Department.

Congressional Record, V. 151, Pt. 17, October 7 to 26, 2005

The Federal Trade Commission Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases: A Commission Report to Congress (Spring 2006)

Congressional Record, V. 151, Pt. 15, September 8 to September 22, 2005

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