ANOTHER CONSPIRACY PROBE TURNS UP NOTHING

March 2, 2001
Ho-hum. Another conspiracy hunt. Another empty bag.

Ho-hum. Another conspiracy hunt. Another empty bag.

When gasoline prices jumped in the US last year, Congress did its usual thing: It ordered up an investigation of possible collusion among oil companies.

Now the investigators have done their usual thing: They've concluded that, no, companies didn't conspire to drive up gasoline prices.

It happens every price cycle. And it's a waste of time.

On Feb. 26, Federal Trade Commission Chairman Robert Pitofsky informed Rep. Billy Tauzin (R-La.) by letter that FTC had finished its investigation and found no "tacit or explicit collusion among market participants."

Pitofsky told Tauzin, chairman of the House Energy and Commerce Committee, that FTC would make a report to Congress this summer. Tauzin released Pitofsky's letter Feb. 28.

Factors in the price jump, the letter said, included "capacity restraints, production and distribution difficulties, government regulations, and the behavior of industry participants in responding to the gasoline shortage."

No industry conspiracy there. If there's a conspiracy, it's by regulators who seem determined to shutter as many refineries as possible in pursuit of air-quality performance standards stricter than they need to be.

In fact, with waves of regulations now forcing refiners to make large investments just to stay in business, the capacity restraints and distribution difficulties cited by Pitofsky are likely to worsen. The gasoline price levels that so aroused Congress last summer therefore might last awhile.

The conspiracy hunts with which Congress regularly responds to price increases don't hurt oil and gas companies. They cause inconvenience and low-grade annoyance, but no serious damage.

The problem with them is that they masquerade as a response to what is fundamentally a supply problem—more particularly, processing capacity under regulatory siege.

If Congress were serious about fuel prices, it would confront a pattern of government mistakes in the area of energy supply—and quit exploiting deep-seated conspiracy suspicion.

The politics of fuel prices has lapsed into a silly cycle: an increase generates indignation, which leads to investigation, which ends with exoneration.

And a simple question punctures the cycle's basic assumption: If companies really could manipulate prices through collusion, why would they ever have let price slump to the levels that pummeled their finances and stock values in 1998-99?

The automatically indignant have short memories, which is why they are always wrong.