Tuesday, June 21, 2011

FTC Opens Investigation into Gasoline Prices

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The FTC is looking into the recent rise in prices at the gas pump. The agency disclosed the investigation in a June 20 letter to Senator Maria Cantwell (D, Wash.).

In a March 25 letter, a bi-partisan group of senators, led by Cantwell, asked the agency whether it was fully utilizing its “regulatory authority . . . to ensure that American consumers are paying a fair price for gasoline.”

At that time, the senators requested information on: (1) FTC efforts to enforce the Petroleum Market Manipulation Rule since it was finalized in 2009; (2) steps taken or planned to be taken by the Commission in response to recent price volatility in the petroleum market; and (3) FTC current and planned efforts to work with the Commodity Futures Trading Commission and other agencies to prevent fraud or deceit in the petroleum market.

In light of substantial increases in crude oil and refined petroleum product prices and profit margins this year and other developments, the FTC decided that an investigation was appropriate, according to a letter signed by FTC Chairman Jon Leibowitz.

“[T]he Commission has opened an investigation and has authorized the use of compulsory process to determine whether certain oil producers, refiners, transporters, marketers, physical or financial traders, or others (1) have engaged or are engaging in practices that have lessened or may lessen competition—or have engaged or are engaging in manipulation—in the production, refining, transportation, distribution, or wholesale supply of crude oil or petroleum products; or (2) have provided false or misleading information related to the wholesale price of crude oil or petroleum products to a federal department or agency.”

The agency is trying to determine whether there has been a violation of Section 5 of the FTC Act (CCH Trade Regulation Reporter ¶25,245), the Commission’s Petroleum Market Manipulation Rule (CCH Trade Regulation Reporter ¶38,065), or Sections 811 or 812 of the Energy Independence and Security Act of 2007 (CCH Trade Regulation Reporter ¶27,801; ¶ 27,802).

“The information to be secured through this investigation may include, but is not limited to, utilization and maintenance decisions, inventory holding decisions, product supply decisions, product import and export strategies and volumes, product output decisions, capital planning decisions, product margins and profitability, and any other information which may be relevant to determining whether there is a reason to believe that there have been violations of any of the foregoing statutes or of the Rule,” the letter states.

Oil and Gas Price Fraud Working Group

The FTC also said that it would continue to assist the recently announced federal/state Oil and Gas Price Fraud Working Group. The group was established to help identify civil or criminal violations in the oil and gasoline markets, and to ensure that American consumers are not harmed by unlawful conduct.

The group includes representatives from the Justice Department, the FTC, the Commodity Futures Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, the Department of Agriculture, the Department of Energy, and the states.

A press release, including the text of the letter from Commissioner Liebowitz, appears here on Senator Cantwell's website.

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