FTC investigates gas price profiteering

By Tom Doggett

WASHINGTON (Reuters) – The U.S. Federal Trade Commission is
investigating whether gasoline price profiteering has occurred
and if oil companies have constrained refinery capacity to
manipulate fuel prices, an agency official said Wednesday.

“A determination that unlawful conduct has occurred will
result in aggressive law enforcement activity by the FTC,” John
Seesel, an FTC associate general counsel, told a Senate
Commerce Committee hearing.

The FTC is responding to language in recently passed energy
legislation that requires the agency to probe whether gasoline
prices have been manipulated by attempts to reduce refining
capacity, Seesel said.

U.S. oil companies have adamantly denied that they have
acted to constrain gasoline or crude oil supplies.

The FTC is keeping an eye on gasoline prices, even though
they have fallen from their record $3.07 per gallon national
average price seen when Hurricane Katrina hit the Gulf Coast,
Seesel said.

“The commission is very conscious of the swift and severe
price spikes that occurred immediately before and after Katrina
made landfall,” Seesel said.

Four major oil refineries remain shut and a large chunk of
oil production in the Gulf of Mexico is still offline due to
damage from Hurricane Katrina which slammed into Louisiana and
Mississippi three weeks ago.

And now with the approach of Hurricane Rita, which has
strengthened into a Category 4 storm, oil and gas companies
have evacuated thousands of their workers from oil rigs and
production platforms in the Gulf. Some refineries are starting
to shut down, and Houston’s mayor called for an evacuation of
low-lying, flood-prone areas of his city.

Separately, the Government Accountability Office said
recent retail gasoline prices have risen faster than crude oil
prices.

This goes against the historical trend when major crude oil
price swings are generally mirrored by gasoline prices, said
Jim Wells, GAO director of natural resources and environment.