FTC to continue gasoline price investigation

The US Federal Trade Commission said Friday its investigation into recent Midwest gasoline price increases will continue another 3-4 months.

Jul 28th, 2000

WASHINGTON, DC�The US Federal Trade Commission said Friday its investigation into recent Midwest gasoline price increases will continue another 3-4 months.

In an interim report to Congress, FTC discussed possible causes of the spikes including crude oil prices, the introduction of Environmental Protection Agency rules for summer-blend reformulated gasoline, and pipeline problems.

The commission said, "Although it is likely that each of these supply factors contributed to the dramatic recent price spikes in the Midwest, no single factor appears from staff's preliminary investigation to be likely to provide a full explanation, and staff does not yet have sufficient information to assess the impact of these factors in combination."

FTC said it is examining data for the possibility of illegal "collusion or tacit coordination."

The staff began issuing subpoenas June 29 to nine refiners that supply Midwest markets and within a month it had received 200 boxes of documents, the commission said.

In mid-July, staff issued a second round of subpoenas to other refiners, followed by civil investigative demands requesting compilations of data and answers to written questions.

And on July 25, the staff issued another set of subpoenas to companies that own or operate pipelines serving Midwest markets.

The interim report said FTC has held 15 interviews with market participants, consumers, corporate users of gasoline, and others. It also is obtaining industrywide pricing data.

FTC said, "Once the documentary material has been analyzed, staff will take depositions under oath of key decision-making personnel throughout the gasoline distribution chain in the Midwest."

The report said FTC is coordinating its investigation with the attorneys general of Wisconsin, Illinois, Michigan, Ohio, Indiana, Missouri, Iowa, Minnesota, Kentucky, South Dakota, and West Virginia.

Price spikes
The report said, "Gasoline prices have long been seasonally cyclical, rising in late spring and early summer as consumer demand increases with the onset of the summer driving season.

"However, the increases this year in some local markets, particularly in the Midwest, eclipsed those experienced in past years, and were much greater than those experienced in other US markets."

It said consumers in Chicago and Milwaukee saw significant price spikes at the retail level, both for Phase II reformulated gasoline�required under the Clean Air Act for those markets�and for conventional gasoline, which is used in other Midwest markets.

The report said the national average retail price of RFG increased from $1.29 to $1.67/gal from November 1999 to June 12, before declining to $1.61 on July 17.

But in Chicago, the average RFG price rose from $1.85/gal on May 30 to $2.13 on June 20, before falling to $1.57 on July 24.

Between May 30 and June 20 in Milwaukee the average RFG price increased from $1.74/gal to $2.02, but by July 24 had fallen to $1.48.

FTC said, "Conventional gasoline prices in the Midwest also have risen substantially from late 1999 levels, although they also have receded significantly since the highs in mid-June."

It said the national average retail price increased from $1.25 to $1.61/gal for conventional gasoline between November 1999 and June 12, and then eased to $1.51 on July 17.

Average conventional gasoline retail prices in the Midwest rose from $1.55 to $1.85/gal from May 29 to June 19, but had decreased to $1.48 by July 17.

"The price runup was intense, but brief, with prices peaking during the week of June 18-24," the report said.

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