- The Washington Times - Tuesday, February 25, 2003

Virginia's attorney general has started an investigation into price gouging at the pump after a gasoline retailer association complained about soaring wholesale prices for station owners.
Attorney General Jerry Kilgore "has begun looking into the matter to make sure there is no price gouging," said spokesman Tim Murtaugh, who declined to comment further.
On the federal level, presidential candidate Sen. Joseph I. Lieberman, Connecticut Democrat, asked the Energy Department yesterday to examine the issue, and Sen. Charles E. Schumer, New York Democrat, asked the Federal Trade Commission last week to begin an investigation.
The FTC has never found the industry guilty of gouging and has brought no civil or criminal charges. The federal government has investigated the matter at least eight times in the past decade and has found no evidence of criminal behavior.
Mr. Kilgore's office received the first letter of complaint from the Virginia Gasoline Marketers Council six months ago. It urged the state to look into antitrust, predatory pricing and unfair business practices by oil suppliers.
"It's ironic since Virginia gas stations have some of the lower gas prices in the Washington area," said Bruce Keeney, executive vice president of the association.
Edward Murphy at the American Petroleum Institute, the trade association for 400 oil and gasoline companies, called the Virginiainvestigation "groundless," adding that similar inquiries had not turned up illegal activity.
"Gas prices are affected by the crude oil market, which is very competitive," said Mr. Murphy, general manager of the division of the institute that oversees refinery management and transportation.
Crude oil has been trading at or near two-year highs since December, hitting $36.48 yesterday on the New York Mercantile Exchange.
The average price of a gallon of gasoline in the Washington area rose to $1.67 this week, up 18 cents from $1.49 a month ago, according to AAA. The national average has hit $1.66, according to the Energy Information Administration.
Rising crude oil costs are likely to push U.S. retail gasoline prices to an all-time high, agency economist Dave Costello told the Reuters news agency yesterday. The record is $1.71, reached in May 2001.
"If nothing else comes from the Virginia investigation, people will at least know who is getting the profit from these insanely high gas prices, because this is not normal," AAA spokesman Lon Anderson said yesterday.
In 2000, the Congressional Research Service, the public policy arm of the Congress, looked into gasoline price spikes in the Midwest and concluded that they were caused by higher crude prices, mandated use of ethanol, pipeline problems and low inventory.
The General Accounting Office, the investigative arm of the Congress, inquired into spiraling gasoline prices in California in 2001 and attributed the erratic prices to refinery outages in the area, which had disrupted supply and demand.
Maryland created a task force to review price zoning in 2000, but a spokesman for the state comptroller's office said no action has come from the study.
Retailers say their main complaint is price zoning. Refiners operating in Virginia have a price zone for each dealer, with each zone having a different wholesale price. Mr. Keeney said some owners have as much as a 12-cent price discrepancy in wholesale prices for the same market.
Station owner Ron Harrell said he can't shop around for better prices for his Mobil locations in Springfield and Germantown because of the zoning and the lack of wholesale competition.
"I have no ability of shopping around for price and there is no real reason why there should be a 12-cent price disparity between my two stores that sell the same product," Mr. Harrell said.
A gallon of regular unleaded in the Springfield station was $1.68 yesterday, while Germantown customers were paying $1.80. Mr. Harrell also said there is a 2.5-cent difference in state taxes in the wholesale prices at his two stations.
But Mr. Murphy said the zones are necessary for oil companies to compete in local markets. "If the price were the same from Hagerstown, Md., to Alexandria, then wholesalers would lose more profits than they are right now."


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