Cantwell Asks FTC to Investigate Wash. State Gas Price Spike

Local pump prices near record highs as prices nationwide fall

Cantwell, Maria

WASHINGTON -- U.S. Senator Maria Cantwell (D-Wash.) demanded the Federal Trade Commission (FTC) use its regulatory authority to aggressively investigate why Washington state's gasoline prices increased to near record highs during the month of May, even as the world price of oil and national average gas prices dropped significantly.

Today, average Washington gasoline prices are only eight cents lower than the previous record high of $4.35 set on July 6, 2008, when oil was trading at almost $150 per barrel. Today, oil is around $86 per barrel.

"May was a tough month for any Washington state family or business filling up at the pump," Cantwell wrote in her letter (click here to view the full letter).

"That's money that American families and businesses could be spending at local retail stores, neighborhood restaurants and other small businesses that create more than two thirds of our nation's jobs. It is therefore critical that the [FTC] use its statutory authority aggressively to pursue and remedy any purposeful market schemes or reckless supply allocation decisions that are leading to today's elevated gasoline and diesel prices in Washington state or anywhere else across the nation," she said.

"I am requesting the [FTC] utilize its regulatory authority and responsibility granted by Congress to ensure that Washington state consumers are not subject to 'any manipulative or deceptive device or contrivance' that could be resulting in unjustifiably high gasoline prices," she said. "In particular, I am asking the [FTC], pursuant to the Prohibition on Market Manipulation Rule, to investigate whether or not recent and inexplicable gas price spikes in Washington state are the result of deliberative efforts by West Coast refiners to keep gasoline inventories artificially low."

Cantwell added, "Until recently, Washington state gas prices were highly correlated with national and international price trends. While I recognize the West Coast petroleum market … is relatively isolated and utilizes cleaner burning fuels, historically that has resulted in a price premium over national gasoline prices, not any deviation from national price trends. But over the last month, the average price per gallon of gas in Western Washington rose around 20 to 25 cents, while the national average price declined by approximately 17 cents. Has the recent divergence of Washington state and national average petroleum prices triggered the [FTC's] Gasoline and Diesel Monitoring Project? If not, why? If so, when did the [FTC] notice these anomalies? And what is it doing to address them?

Cantwell's letter also referred to a report by McCullough Research that found Washington state gasoline prices should have fallen to $3.51 per gallon if prices had followed supply costs. The difference between this price and the actual cost of gasoline at the pump results in a "windfall profit" for suppliers of $48 million a day, as characterized by the report.