FTC: No evidence of manipulation in 2006 gasoline price increases

The government found no
evidence that refiners
conspired.

WASHINGTON (AP) — The Federal Trade Commission said Thursday it found no evidence of market manipulation by refiners and other sellers in gasoline prices spiking at more than $3 a gallon during the summer of 2006.

Three-quarters of the run-up in the average retail price of gasoline from $2.28 a gallon in February 2006 to a peak of $3.02 a gallon in August 2006 was because of increases in the price of crude oil and ethanol during the summer driving season, the FTC said in a report to President Bush.

The commission put the rest of the blame on increased demand, less gasoline production because of refiners switching to ethanol, damages to refineries from hurricanes Katrina and Rita in 2005 and other refinery outages.

FTC officials who investigated the price run-up said they “cannot definitively rule out all other contributing factors.” But they concluded there was “no evidence that refiners conspired to restrict supply or otherwise violated the antitrust laws.”

The investigation, requested by Bush, was aided by officials at the Justice and Energy departments.

By October 2006, the price had fallen to $2.18 a gallon. It is now about $2.75 a gallon.

Dissenter

The commission voted 4-1 to endorse the report. The lone holdout, Jon Leibowitz, said the FTC staff’s theoretical modeling did not adequately reflect the real possibility of price manipulation.

“The oil industry, which posted record profits in 2006, should not view this report as in any way a vindication of its behavior,” Leibowitz said in a statement on the commission’s Web site.

“Commission staff identified some plausible justifications,” he said. “But the question you ask determines the answer you get: Whatever theoretical justifications exist don’t exclude the real world threat that there was profiteering at the expense of consumers.”