FTC refining way it tracks gasoline price spikes


By OGJ editors

WASHINGTON, DC, May 15 --The Federal Trade Commission said it plans to be more sophisticated in the way it monitors gasoline price spikes.
FTC Chairman Timothy Muris last week said that the commission's monitoring efforts will include the use of a statistical model to track gasoline price spikes on a "real-time" basis that regulators can use to monitor market factors more quickly.
The model will use data from the Oil Price Information Service (OPIS) on daily average retail prices for about 360 cities, as well as data on daily average wholesale (rack) prices for 20 key urban areas across the country, representing about 40% of all US gasoline stations, FTC said.

Muris's comments were part of a 2-day public conference the agency held on gasoline pricing in which various experts from academia, industry, and Wall Street offered regulators and the public detailed analyses of the economic factors that can contribute to sticker shock at the pump.
FTC also plans two new gasoline pricing-related projects due for release later this year. The first will use information gathered from 1985 to 2000 to update the FTC's previous oil merger reports of 1982 and 1989, and the second will be an agency review of the "complex interaction" of factors that affect the prices of refined petroleum products.

API comments
American Petroleum Institute Chief Economist John Felmy told FTC officials that when they examine the various factors that contribute to gasoline prices, they should be aware that government requirements to make and distribute 19 different gasolines are a continuing influence on gasoline prices.

He said "boutique" fuels reduce the flexibility that refiners and distributors need to keep gasoline flowing when unforeseen circumstances affect supplies from one region or one company.

API and other panelists also agreed that a key factor that influences the cost of refined fuels is how much a barrel of crude is trading for on world oil markets.

Political damage control
Higher-than-normal spring gasoline prices this year led regulators and lawmakers to contemplate the possibility they had a serious election-year issue on their hands.

And while prices have stabilized over the past month, both the FTC and Congress are quick to recall highly publicized gasoline price spikes last year, particularly in key Midwestern swing states that may help decide control of a closely-divided Congress this November.

Late last month, Sen. Carl Levin (D-Mich.), chairman of the Senate Permanent Subcommittee on Investigations, released a report alleging that increasing consolidation of the refining industry has led suppliers to increase prices by reducing supply.
He severely criticized the FTC-condoned practice of "zone pricing" that allows marketers to charge different prices for gasoline to different station operators, some of which are in nearby geographic areas. Levin said oil companies use this practice in order to "confine price competition to the smallest area possible and to maximize their prices and revenues at each retail outlet."

The Apr. 29 Senate report said that over recent years oil companies have sought to circumvent antitrust laws by shrinking the size of the zone in some cases to just one retail outlet.
The report was unveiled the day before a series of hearings were to be held to update the public on his subcommittee's 10-month investigation into gasoline prices.
Levin's staff analyzed data obtained from the private company OPIS and the US Department of Energy's statistical arm, the Energy Information Administration. The subcommittee also issued subpoenas to a number of major oil companies and one pipeline company for "relevant" refining and marketing documents from 1998 through 2001.

Levin directed his staff to launch an investigation in June 2001 following dramatic gasoline price spikes in the Midwest. This spring, prices are again rising, and there is a concern that part of the reason is the growing consolidation of the oil business, congressional staff said. Less competition means companies can more easily manipulate prices in a given region, they maintain.
No hearings on the gasoline price issue have been scheduled yet in the Republican-led House, but industry officials concede that if prices continue to rise, there could be hearings there as well.

Refuting conspiracy claim
Industry, however, refuted the view that a handful of companies conspire to drive up prices, as has been alleged in the past by some consumer groups and environmentalists.
"America's gasoline refiners have cooperated with numerous federal and state investigations over the past 3 decades, all of which have found no evidence of collusion or other anticompetitive activity by the petroleum industry. These investigations have shed light on the many factors that determine the price of gasoline at the pump," API officials said in a statement following Levin's report.
"Fuel prices are driven by market forces. Because crude oil is the largest nontax cost component of a gallon of gasoline, the price of gasoline is determined largely by the demand and supply of crude oil worldwide.
"Gasoline prices are also affected by refinery and pipeline interruptions and by constraints that numerous specialized fuels across the country place on refineries and pipelines. Each time there have been supply problems, companies responded by rushing in additional supplies to affected areas, and gasoline prices consequently have gone down.
"The problems that cause market volatility are likely to continue until refiners gain greater regulatory flexibility to decide how best to fully meet all clean-air goals."
Industry witnesses that testified before the Levin panel including executives from the following oil companies: BP America Inc., ExxonMobil Corp., Marathon Ashland Petroleum LLC, ChevronTexaco Corp. and Shell Oil Co.

Related Articles

ExxonMobil forecasts 35% higher world energy demand by 2040

12/15/2014 A significantly bigger global middle class, expanded emerging economies, and 2 billion more people will contribute to 35% higher world energy deman...

ExxonMobil forecasts 35% higher world energy demand by 2040

12/10/2014 A significantly bigger global middle class, expanded emerging economies, and 2 billion more people will contribute to 35% higher world energy deman...

Firms' third-quarter earnings climbed amid lower crude oil prices

12/08/2014 A sample of 58 oil and gas producers and refiners based in the US recorded a combined 38% jump in profits for this year's third quarter compared wi...

Chapman to succeed Pryor as ExxonMobil Chemical president

11/24/2014 Neil A. Chapman is expected to assume the roles of president of ExxonMobil Chemical Co. and vice-president of ExxonMobil Corp. following the retire...

Induced seismicity research effort identifies information gaps

11/10/2014 A federally coordinated effort to determine whether oil and gas activities are related to growing reports of induced seismic activity has identifie...

ExxonMobil, Linn to make second asset exchange this year

10/06/2014 ExxonMobil Corp. has agreed to trade interest in 500 net acres from South Belridge field near Bakersfield, Calif., to Linn Energy LLC, Houston, in ...

ExxonMobil 'winds down' Arctic well, obeys sanctions

09/29/2014 ExxonMobil Corp. released a statement that it is complying with all US sanctions on Russia after news reports that the operator had halted operatio...

AAPG ICE: ExxonMobil outlines international approach to unconventional development

09/22/2014 Global energy demand is expected to increase 35% to 2040, translating to 120 billion boe/year, or nearly 350 million boe/d, stated Rocky Becker, vi...

ExxonMobil ‘winding down’ Arctic well, complying with US, EU sanctions on Russia

09/19/2014 ExxonMobil Corp. released a statement that the company is complying with all US sanctions on Russia after news reports that the operator had halted...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected