When it comes to gasoline prices, the best advice is often to hold onto your hat. Trying to hold onto your wallet frequently proves impossible.
A recent Senate study suggests that part of the reason for the volatility of gasoline prices is a trend toward reduced competition in the industry. The finding is no surprise, at least in the Northwest. Officials in Washington and other West Coast states have been saying the same thing for years.
A Senate investigative committee’s Democratic staff says that oil companies sometimes hold back gasoline supplies to drive up prices. Sen. Carl Levin, D-Michigan, called the report confirmation of "what a lot of us have been saying for some time — that when it comes to gasoline, there is too little competition and too much concentration in many markets of the United States."
The Puget Sound region is certainly one area where competition frequently seems to be low-octane. Although oil companies always have a reason for it, prices here generally run higher than in rest of the country.
The industry denies that there is any lack of competition. Despite consolidations, companies compete vigorously, according to the American Petroleum Institute. To be sure, moreover, the Federal Trade Commission abandoned an antitrust investigation into West Coast gas prices, citing a lack of evidence.
Common sense suggests that the shrinking number of oil companies and refineries will tend to drive up prices. So it makes sense to listen to a call from the attorneys general of Connecticut and Michigan for a one-year moratorium on major oil companies’ mergers. That would give Congress time to develop more effective consumer protection rules.
Oregon Sen. Ron Wyden, a Democrat, has called for creation of "consumer watch zones" where the gasoline market is highly concentrated. In those areas, oil companies might be required to, for instance, be more flexible in the prices they charge to filling station operators, unless the corporations could prove that their current pricing rules don’t harm consumers. The companies claim it would be wrong to put the burden of proof on them. Given the prices paid here, Such proof might be a tall — and appropriate — order.
As summer approaches, consumers are bracing for more price hikes. It would be helpful for Congress to continue looking at tightening the rules or giving more money to the Federal Trade Commission so it can work more effectively to encourage more competition. Drivers deserve relief from the perpetual squeeze at the pumps.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
