WASHINGTON -- In April 2006, while the Federal Trade Commission (FTC) was completing its intensive investigation of petroleum industry conduct and gasoline pricing following Hurricane Katrina, President Bush directed the U.S. Department of Justice (DOJ) to work with the FTC and the U.S. Department of Energy (DOE) to conduct inquiries into rising gasoline prices.
The just-released Report on Spring/Summer 2006 Nationwide Gasoline Price Increases, which builds on the investigative work done in connection with the post-Hurricane Katrina report, describes [image-nocss] staff's factual findings and economic analysis that price increases during the spring and summer of 2006 were attributable to six factors: (1) seasonal effects of the summer driving season; (2) increases in the price of crude oil; (3) increases in the price of ethanol; (4) capacity reductions stemming from refiners' transition from the fuel additive methyl tertiary-butyl ether to ethanol; (5) refinery outages resulting from hurricane damage, other unexpected problems or external events, and required maintenance; and (6) increased consumer demand for gasoline beyond the seasonal effects of the summer driving season.
The determination that the price increases were attributable to these six factors also supports the conclusion that the increases did not stem from violations of the antitrust laws.
While conducting this inquiry into nationwide price increases, FTC staff has continued to monitor retail and wholesale prices of gasoline and diesel fuel at a more localized level to identify unusual price movements and determine whether they might result from anticompetitive conduct. The agency's economists regularly scrutinize price movements in 20 wholesale regions and approximately 360 retail areas across the country, and FTC attorneys and economists initiate law enforcement investigations in response to suspect pricing episodes as they are identified.
The FTC vote to issue the report was 4-1, with Commissioner Jon Leibowitz dissenting and issuing a separate statement. In it, he said, The oil industry, which posted record profits in 2006, should not view this report as in any way a vindication of its behavior. whatever theoretical justifications exist don't exclude the real-world threat that there was profiteering at the expense of consumers. (Click here to view Leibowitz's full dissenting statement.)
Click here to view a copy of the full FTC report.
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