WASHINGTON -- Testifying Wednesday on behalf of the Federal Trade Commission (FTC) before the U.S. Senate's Committee on Commerce, Science & Transportation, Associate General Counsel for Energy John Seesel detailed the FTC's initiatives to protect competitive markets in the production, distribution and sale of gasoline, and discussed in detail an FTC study issued earlier this year on the factors affecting gasoline prices across the United States.
No other industry's performance is more deeply felt or carefully scrutinized by the FTC, Seesel said [image-nocss] in opening the testimony. In the recent weeks since Hurricane Katrina, gasoline prices rose sharply to $3 per gallon or more in most markets. On top of an already tight market, [Hurricane] Katrina has temporarily disrupted an important source of crude oil and gasoline supply.
The FTC, he said, is very conscious of the swift and severe price spikes that occurred immediately before and after Katrina made landfall. There have been numerous calls for investigations of price gouging,' particularly at the retail gasoline level. The Commission staff has already launched an investigation to scrutinize whether unlawful conduct affecting refinery capacity or other forms of illegal behavior have provided a foundation for price manipulation.
A determination that unlawful conduct has occurred will result in aggressive law enforcement activity by the FTC, Seesel said.
Seesel further testified that in 2004, the FTC staff published a study reviewing mergers and structural changes in the U.S. petroleum industry. The study also provided an overview of antitrust enforcement actions the Commission has taken since 1981, including 19 complaints filed against larger petroleum mergers. In addition, the FTC actively monitors wholesale and retail prices of gasoline and diesel fuel, Seesel stated, to protect consumers by identifying unusual movements in prices both at the wholesale and retail levels and investigating their causes when appropriate.
The testimony reviewed the basic tools the FTC uses to promote competition in the petroleum industry, including challenging potentially anticompetitive mergers, prosecuting nonmerger antitrust violations, monitoring industry conduct to detect possible anticompetitive behavior and researching developments in the petroleum sector. Next, it reviewed what the FTC has learned from its conferences and research, as well as its review of recent gasoline price changes.
It also provided an explanation of the FTC's recent report on the factors affecting the price of gasoline. The report analyzed the factors, including supply, demand and competition, as well as federal, state and local regulations, that drive gasoline prices, so policy-makers can evaluate and choose strategies likely to succeed in addressing high gasoline prices.
The testimony stressed that the worldwide supply, demand and competition for crude oil are the most important factors in the national average prices of gasoline in the United States, and that gasoline supply, demand and competition produced relatively low and stable prices from 1984 until 2004, despite substantial increases in U.S. gasoline consumption.
It also discussed local regulations that may have an impact on retail gasoline prices, as well as how the development of hypermarkets has affected what consumers pay at the pump.
Click here to view the full text of Sessel's testimony. http://www.ftc.gov/os/testimony/050921gaspricestest2.pdf
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