WASHINGTON -- The just-released Federal Trade Commission (FTC) report, "Investigation of Gasoline Price Manipulation & Post-Katrina Gasoline Price Increases, whichas reported in CSP Daily News yesterdayfound no evidence of coordinated, widespread petroleum industry market manipulation and only a few instances of regional and local gasoline price gouging, has sparked comments pro and con as to the accuracy and objectivity of the findings.
At the Senate Committee on Commerce, Science & Transportation's hearing on "Price Gouging & Gasoline," [image-nocss] U.S. Senator Maria Cantwell (D-Wash.) joined a bipartisan group of committee members in questioning the thoroughness of the FTC report. They said it failed to answer some critical questions.
Today's hearing underscored the broad support we know exists in the Senate for a federal ban on gas price gouging said Cantwell, a member of both the Senate Commerce and Energy Committees. I'm optimistic we can reach a bipartisan agreement on legislation soon. The FTC is failing to do its job today. This legislation could help give [it] an infusion of backbone.
While the report identified seven instances of price gouging among refiners, the FTC appeared to go out of its way to make excuses on these entities' behalf, Cantwell said. Given the redaction of critical pieces of information, it is impossible to tell whether the FTC further investigated the specific prices charged by these entities within various geographic markets. Also, some senators took issue with the thoroughness of the commission's review of oil industry inventory practices, upstream profits, exporting and speculation in energy markets.
Any investigation is only as good as the questions asked. Once again, by failing to ask all the right questions, this investigation hasn't given American consumers the complete picture they deserve, she said. The report found evidence of price gouging, but the FTC followed it up with a massive failure to connect the dots. The FTC report tries to explain away the evidence.
Click here to view a webcast of the hearing.
Arizona Attorney General Terry Goddard called the FTC's new report "an unpersuasive defense of the oil industry." Saying that the report downplayed instances of gouging, he added, The FTC could find nothing wrong with the oil industry exploiting a national disaster to rack up record profits by forcing consumers to pay dramatically higher prices. Rather than acting as an advocate for consumers in times of a supply emergency, the agency seems intent on justifying whatever prices the oil industry chooses to charge."
An investigation into last September's price increases in Arizona by Goddard's office found that some companies tripled their profit margins after the hurricane. Since Arizona does not have a law against price-gouging, however, those increases were not illegal.
"The FTC report corroborates the findings of our investigation that oil companies used a hurricane to fatten their profits," Goddard said. "I think consumers need to be protected during a supply disruption with an anti-price-gouging law, but the FTC apparently does not. The implication of the FTC's analysis is that consumers should stop buying gas if they don't like higher prices. That makes no sense in Arizona where consumers have no choice.
Goddard, who is co-chair of the Consumer Protection Committee of the National Association of Attorneys General (NAAG), will meet on June 12 with FTC and U.S. Justice Department officials in Washington to discuss gasoline prices. The meeting was requested by state attorneys general in
response to rising gas prices this spring.
Meanwhile, the National Petrochemical & Refiners Association (NPRA) said it welcomed release of the FTC's report. "We are still reviewing the full text of the FTC's 222-page report, but the statementconfirms our previous statements and written testimony on the subject, said NPRA President Bob Slaughter. This investigation, like so many others conducted at the federal and state level, appears to vindicate the refining industry's actions post-Katrina, as well in the other areas that were the subject of the study."
He added, NPRA would like especially to emphasize the FTC's finding that there is no evidence to suggest that refinery expansion decisions over the past 20 years resulted from either unilateral or uncoordinated attempts to manipulate prices. Rather, the pace of capacity growth resulted from competitive market forces'."
Slaughter concluded that the report will doubtless be the focus of much discussion in coming days. We appreciate the thoroughness with which FTC conducted this investigation and the wide scope of its inquiry. We hope that Congress and the public will take full notice of its findings. If so, they will conclude that market forces and the operations of the diverse and competitive U.S. refining industry have served the nation well both under normal and difficult economic conditions."
In testimony before the Senate Committee on Commerce, Science & Transportation, Slaughter said, These statements parallel the findings of more than two dozen state and federal investigations of the oil industry in the last six years. As Yogi Berra once famously said: 'It's deja vu all over again'.
He added, "The tight gasoline markets of the past several years have led to dozens of investigations of the refining industry at federal and state levels. Like hearty perennials they come up time and time again. In each case, the industry has been cleared of wrongdoing. The simple fact is that allegations of refiner price-fixing, price gouging and other illegal pricing practices are patently false. This most recent FTC probe was thorough and extensive in scope, as detailed in the commission's interim report to the Congress last March. NPRA hopes that Congress and the public take full notice of its findings. If so, they will conclude that market forces and the activities of the diverse and competitive U.S. refining industry have served the nation well under both normal and difficult economic conditions."Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.