|June 15, 2005
Media Contact: Jenn Meale
Phone: (850) 245-0150
|en Español||Print Version||Tweet|
TALLAHASSEE – Attorney General Charlie Crist today released the results of a study of gasoline pricing in Florida, concluding that two factors besides high crude oil prices – purposely low inventory and a shrinking number of suppliers in the industry – were the primary contributors to statewide gasoline price spikes experienced by Florida consumers in 2004. The report follows an antitrust investigation launched by the Attorney General in May 2004. While the examination found that there was no clear evidence of state or federal antitrust violations, it concluded that the following factors contributed to the high prices:
- Major oil refiners intentionally maintained low inventory levels in order to maximize profits. With no cushion in inventory levels, whenever demand increased beyond expectations, supplies became unusually tight. Unexpected disruptions such as refinery fires, pipeline breaks and barge accidents, in the absence of sufficient inventory, added further pressure to push prices higher.
"Clearly the petroleum companies have been maintaining low inventories in order to maximize profits," said Crist. "Inadequate inventory combined with a limited number of suppliers adds up to high prices at the pump. We urge the oil companies to consider the effects that the lack of sufficient inventory is having on everyday consumers and on the economy. We hope they will look to other ways to find a better balance between their corporate goals and the general welfare of our citizens."
Simultaneous to the release of this report, the Attorney General sent a letter to Federal Trade Commission Chairman Deborah Platt Majoras voicing concerns about a proposed merger in the industry. In April, Valero Energy Corporation announced its agreement to acquire Premcor Incorporated. Further consolidation in the oil refining segment of the industry will only lessen the competitive forces that ultimately benefit consumers through lower prices, Crist said in his letter.
In its investigation over the past year, the Attorney General's Antitrust Division issued dozens of subpoenas, reviewed nearly 240,000 pages of documents and reviewed computer disks containing nearly 60,000 files in order to examine the gas price increases of the past year and determine their likely causes. To assist in this endeavor, the Attorney General retained two well-known experts with substantial expertise in the study of the petroleum industry, Dr. Keith Leffler and Mr. Peter Ashton. Dr. Leffler is an economist with the Department of Economics at the University of Washington, while Ashton is a financial consultant specializing in the economics of the petroleum industry.
"Gas prices have risen sharply over the last year and the Attorney General's Office conducted this study to ensure that our state's visitors and citizens were not unfairly taken advantage of," said Crist. "This study provides greater insight into the complex petroleum industry and highlights factors that contributed to the gas price spikes of 2004."
A copy of the Attorney General's letter to the FTC is available at: http://myfloridalegal.com/webfiles.nsf/WF/KGRG-6DDLEC/$file/Letter_to_FTC.pdf
The Report on Gasoline Pricing in Florida is available at: http://myfloridalegal.com/webfiles.nsf/WF/KGRG-6DDLDL/$file/GasPriceReport.pdf
A one-page overview of the report is available at: http://myfloridalegal.com/webfiles.nsf/WF/KGRG-6DDLC5/$file/GasPriceOverview.pdf