When he came before the Senate Appropriations Committee’s Financial Services and General Government Subcommittee on May 14, Federal Trade Commission Chairman William E. Kovacic told the chairman, Richard J. Durbin (D-Ill.), exactly what he wanted to hear.
Noting that diesel fuel historically has been less expensive than gasoline at the retail level in an Apr. 23 letter to Kovacic, the senator said that the Energy Information Administration reported that week that diesel reached a record $4.14/gal national average compared to $3.51/gal for gasoline. “The growing price gap has never been wider,” he said.
Two days before the hearing, EIA reported that diesel cost an average $4.33/gal and gasoline $3.72/gal. Durbin came to the hearing looking for answers from Kovacic and commission member Jon Leibowitz.
The FTC officials were there to testify about the agency’s fiscal 2009 budget request. They spent much of their time answering questions from Republican as well as Democratic committee members about FTC efforts to monitor oil product prices.
‘Facts, not anecdotes’
“If oil companies are making excessive profits and manipulating markets, let’s throw the book at them. But let’s base our actions on facts and not anecdotes,” said Sam Brownback (R-Kan.), the ranking minority member.
Durbin said that the difference between crude oil and product prices has grown from $1-5/bbl to more than $40/bbl. “The crack spread for middle distillate and distillate fuel oil has grown dramatically. The spread for jet fuel has also grown,” he said.
Other federal lawmakers have accused the FTC of not moving promptly to use oil market investigation authority it received under the 2007 Energy Independence and Security Act. Kovacic pointed out that on May 1 it sought public comments on how to interpret its new responsibility. “The 30-day comment period runs through June 6, and the commission anticipates concluding the rulemaking process this year,” he said.
‘Several scenarios’
“We intend to examine several scenarios, including the possibility of fraud in reporting pricing and transaction information. We’ll also look at more traditional behavior such as collusion, but not antitrust issues which other agencies already examine,” Kovacic continued.
The FTC also plans to study impacts following public announcements of refinery shutdowns and efforts to move products into and out of specific markets, Leibowitz added.
The FTC also intends to use resources the subcommittee gave it a year ago and work closely with its counterparts in other countries on this inquiry, the agency’s chairman said. “There’s no bigger issue for them, either,” he said.
I asked Durbin after the hearing if he was satisfied that the FTC was using its new authority quickly enough. “That was the good news today. They obviously responded to our letter of 2 weeks ago. We’ll keep in close touch as the process unfolds and offer suggestions when we think it’s appropriate and necessary,” he replied.
