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

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

ONGC Videsh unit drills horizontally in Russia’s Snezhnoye field

07/24/2015 Imperial Energy Corp. PLC, a subsidiary of ONGC Videsh Ltd., has drilled two horizontal wells in the Naunak formation of Snezhnoye field in the Tom...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

Statoil’s Julius well discovers gas, condensate in King Lear area

07/23/2015 Statoil ASA said its Julius exploratory well, drilled in the King Lear area of the Norwegian North Sea, has discovered gas and condensate (OGJ Onli...

MARKET WATCH: Oil futures plunge below $50/bbl

07/23/2015

Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

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