Casey Urges Gas Price Investigation
WASHINGTON, DC– At a time when Pennsylvanians are faced with skyrocketing gas prices, U.S. Senator Bob Casey (D-PA) today sent a letter to William Kovacic, Chairman of the Federal Trade Commission (FTC) regarding the potential of price gouging and price manipulation.
“I hope that you and I can work together to give the FTC the tools it needs to investigate and help prosecute companies that are adopting questionable business strategies,” Senator Casey wrote. “The Unites States Congress and the FTC have an obligation to provide consumers with the assurance that whatever price they are paying at the pump, they can be certain they aren't being taken for a ride.”
In the letter, Senator Casey strongly urged the FTC to continue to audit and monitor activity on all aspects of the oil and gas market. Senator Casey also expressed his concerns that the ambiguity of the meaning of price gouging along with a very strict definition for what constitutes collusion on the market may be tying the hands of the FTC to investigate and correct unfair business practices that may further drive up the cost to Pennsylvanians.
Full text of the letter is below:
Dear Chairman Kovacic:
As gasoline, diesel, and home heating fuel prices continue to rise, Pennsylvanians are increasingly concerned that questionable business practices may be contributing to the price we are paying at the pump. I understand that the Federal Trade Commission (FTC) completed a report which examined potential gasoline price gouging in 2006, as mandated by Congress. I further understand that the FTC found no evidence of price gouging or collusion in the market. In reviewing the FTC's study, however, it seemed that there were some price manipulations that occurred in 2005 and could be continuing today.
For example, the section of the FTC report on gas prices post-Hurricane Katrina found that, even with local and regional market differences taken into account, eight of the 30 oil refiners audited increased their prices at least five cents more than the national average. These same firms also reported increased profits, which logically means that the increased prices were not necessary to cover bottom line costs. The FTC accepted the refiners' reasoning that they were responding to "imprecise and changing perceptions of market conditions." While the FTC might not consider this "price gouging" per se, any attempt by oil producers, refiners, and retailers to manipulate prices for extra profit is a serious problem.
My reasons for writing to you are two-fold. First, I strongly urge the FTC to continue to audit and monitor activity on all aspects of the oil and gas market and to demand complete and thoughtful answers from companies whose stories just don't make sense. Second, I am deeply concerned that the ambiguity of the meaning of price gouging along with a very strict definition for what constitutes collusion on the market may be tying the hands of the FTC to investigate and correct unfair business practices that may further drive up the cost to Pennsylvanians. In an effort to provide the FTC with the tools it needs to protect consumers, the 2007 energy bill also required the FTC to create regulations concerning market manipulation. I would appreciate an update on the status of FTC’s process for creating and implementing this new regulation.
I hope that you and I can work together to give the FTC the tools it needs to investigate and help prosecute companies that are adopting questionable business strategies. The Unites States Congress and the FTC have an obligation to provide consumers with the assurance that whatever price they are paying at the pump, they can be certain they aren't being taken for a ride.
Sincerely,
Robert P. Casey, Jr.
United States Senator
“I hope that you and I can work together to give the FTC the tools it needs to investigate and help prosecute companies that are adopting questionable business strategies,” Senator Casey wrote. “The Unites States Congress and the FTC have an obligation to provide consumers with the assurance that whatever price they are paying at the pump, they can be certain they aren't being taken for a ride.”
In the letter, Senator Casey strongly urged the FTC to continue to audit and monitor activity on all aspects of the oil and gas market. Senator Casey also expressed his concerns that the ambiguity of the meaning of price gouging along with a very strict definition for what constitutes collusion on the market may be tying the hands of the FTC to investigate and correct unfair business practices that may further drive up the cost to Pennsylvanians.
Full text of the letter is below:
Dear Chairman Kovacic:
As gasoline, diesel, and home heating fuel prices continue to rise, Pennsylvanians are increasingly concerned that questionable business practices may be contributing to the price we are paying at the pump. I understand that the Federal Trade Commission (FTC) completed a report which examined potential gasoline price gouging in 2006, as mandated by Congress. I further understand that the FTC found no evidence of price gouging or collusion in the market. In reviewing the FTC's study, however, it seemed that there were some price manipulations that occurred in 2005 and could be continuing today.
For example, the section of the FTC report on gas prices post-Hurricane Katrina found that, even with local and regional market differences taken into account, eight of the 30 oil refiners audited increased their prices at least five cents more than the national average. These same firms also reported increased profits, which logically means that the increased prices were not necessary to cover bottom line costs. The FTC accepted the refiners' reasoning that they were responding to "imprecise and changing perceptions of market conditions." While the FTC might not consider this "price gouging" per se, any attempt by oil producers, refiners, and retailers to manipulate prices for extra profit is a serious problem.
My reasons for writing to you are two-fold. First, I strongly urge the FTC to continue to audit and monitor activity on all aspects of the oil and gas market and to demand complete and thoughtful answers from companies whose stories just don't make sense. Second, I am deeply concerned that the ambiguity of the meaning of price gouging along with a very strict definition for what constitutes collusion on the market may be tying the hands of the FTC to investigate and correct unfair business practices that may further drive up the cost to Pennsylvanians. In an effort to provide the FTC with the tools it needs to protect consumers, the 2007 energy bill also required the FTC to create regulations concerning market manipulation. I would appreciate an update on the status of FTC’s process for creating and implementing this new regulation.
I hope that you and I can work together to give the FTC the tools it needs to investigate and help prosecute companies that are adopting questionable business strategies. The Unites States Congress and the FTC have an obligation to provide consumers with the assurance that whatever price they are paying at the pump, they can be certain they aren't being taken for a ride.
Sincerely,
Robert P. Casey, Jr.
United States Senator
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