Big Oil Not to Blame for High Gas Prices
WASHINGTON -- The Federal Trade Commission (FTC) found yesterday that the big-oil companies did not conspire to raise U.S. gasoline prices in the summer of 2006, and rather, it was high crude oil costs and supply hiccups that caused a jump in pump prices, Reuters reported.
"Our targeted examination of major refinery outages revealed no evidence that refiners conspired to restrict supply or otherwise violated antitrust laws," the FTC said. "We, therefore, conclude that further investigation of the nationwide 2006 gasoline price spike is not warranted at this time."
The FTC said approximately 75 percent of the rise in prices was due to the seasonal increase in summer driving, pricier oil and more expensive ethanol, which was blended into gasoline, the Reuters report stated.
The remaining 25 percent of the price increase was attributed to lower gasoline production, the result of refiners converting to ethanol as the primary clean-burning fuel additive, and lingering damage from the 2005 Hurricanes Katrina and Rita that reduced refining capacity, according to the report.
The FTC said its investigation found the increases in motor-fuel prices "were caused by a confluence of factors reflecting the normal operation of the market."
Many lawmakers last summer accused oil companies, which were posting profits in the billions, of overcharging U.S. consumers at the pump, Reuters reported.
President George W. Bush asked the FTC and the Justice and Energy Departments to investigate whether manipulation or other illegal activity by oil companies was the cause for the sharp rise in gasoline prices, the report stated.
The national average for gasoline jumped from $2.28 a gallon in February 2006 to $2.89 by early May. Prices declined slightly through June, then hit a peak of $3.02 a gallon during the second week of August, eventually declining to $2.18 by the end of October, Reuters reported.
However, FTC Commissioner Jon Leibowitz disagreed with the report's conclusions, and issued a separate statement stating that the agency developed a "theoretical model" for why gasoline prices likely increased, the report stated.
"Our targeted examination of major refinery outages revealed no evidence that refiners conspired to restrict supply or otherwise violated antitrust laws," the FTC said. "We, therefore, conclude that further investigation of the nationwide 2006 gasoline price spike is not warranted at this time."
The FTC said approximately 75 percent of the rise in prices was due to the seasonal increase in summer driving, pricier oil and more expensive ethanol, which was blended into gasoline, the Reuters report stated.
The remaining 25 percent of the price increase was attributed to lower gasoline production, the result of refiners converting to ethanol as the primary clean-burning fuel additive, and lingering damage from the 2005 Hurricanes Katrina and Rita that reduced refining capacity, according to the report.
The FTC said its investigation found the increases in motor-fuel prices "were caused by a confluence of factors reflecting the normal operation of the market."
Many lawmakers last summer accused oil companies, which were posting profits in the billions, of overcharging U.S. consumers at the pump, Reuters reported.
President George W. Bush asked the FTC and the Justice and Energy Departments to investigate whether manipulation or other illegal activity by oil companies was the cause for the sharp rise in gasoline prices, the report stated.
The national average for gasoline jumped from $2.28 a gallon in February 2006 to $2.89 by early May. Prices declined slightly through June, then hit a peak of $3.02 a gallon during the second week of August, eventually declining to $2.18 by the end of October, Reuters reported.
However, FTC Commissioner Jon Leibowitz disagreed with the report's conclusions, and issued a separate statement stating that the agency developed a "theoretical model" for why gasoline prices likely increased, the report stated.