Senators Seek Investigation after News Report o Potential Price Fixing by Refiners

New reports indicate that refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line while Americans are struggling to keep up with soaring gas prices, said four U.S. senators. They wrote to Federal Trade Commission (FTC) Chairman Jon Leibowitz, calling for an investigation into any potential wrongdoing, as well as an assessment into the impact such alleged actions may have on gasoline prices. The letter followed a report in the Kansas City Star that analyzed the ballooning profit margin by oil refiners in recent months.

“At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices, the idea that refiners may be manipulating the market to keep prices artificially high is offensive,” the letter, dated May 16, said. ‘It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation,” the letter said. It was signed by senators Richard Durbin (D-Ill.), Claire McCaskill (D-Mo.), Patty Murray (D-Wash.) and Charles Schumer (D-N.Y.).

The full text of the letter is below:

May 16, 2011

Jon Leibowitz, Chairman
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

Dear Chairman Leibowitz:

We write today to request the Commission begin an investigation into potential price fixing of gasoline by U.S. refiners. Recent reports have indicated that U.S. refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line. If true, this behavior is a direct affront to the American people who are still struggling with the economic downturn. It is currently within the Federal Trade Commission’s (Commission) authority to review these allegations for any potential wrongdoing and to determine the impact these actions may have on gasoline prices both regionally and throughout the country.

The rise in the price of oil is certainly a driving factor behind the recent rise in gasoline prices, but concerns have been raised that while gasoline use is declining, U.S. gasoline inventories remain below average and refining margins continue to rise. According to information posted by the Energy Information Administration U.S. refiners are using only 81.7 percent of their capacity, a decline of 7 percent from the same time last year. Moreover, since the beginning of 2011 U.S. refiners have seen over a ninety percent increase in their refining margins. While some have argued that this increase is due to potential impacts from recent flooding along the Mississippi River, this cannot justify the steady increases in their margins since January of this year.

At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices, the idea that refiners may be manipulating the market to keep prices artificially high is offensive. It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation. Accordingly, we request that the Commission open a full investigation into these allegations of wrongdoing and to determine the impact this behavior, if confirmed, has on regional and national gasoline prices.

Thank you for your consideration of our request. We look forward to hearing from you.
Sincerely,

CLAIRE MCCASKILL
United States Senator

CHARLES E. SCHUMER
United States Senator

DICK DURBIN
United States Senator

PATTY MURRAY
United States Senator