$2.00 a Gallon: The Good Old Days

fleeced at the pumpI found this report on the FTC’s website, telling us how supply and demand is responsible for high gas prices.

Somewhere in there, they also mention the goofball States having different gasoline mixture requirements as a factor.

It’s either amusing or annoying, but here’s the Executive Summary from the document. This is the kind of stuff your tax dollars pay for.


Many people who purchased gasoline in the U.S. in the past week likely could report the price paid per gallon. Consumers closely follow gasoline prices, and with good reason. U.S. consumers have experienced dramatic increases and wide fluctuations in gasoline prices over the past several years. During 2004 and 2005, U.S. consumers spent millions of dollars more on gasoline than they had anticipated. In the spring of 2005, the national weekly average price of gasoline at the pump, including taxes, rose as high as $2.28 per gallon. Steep, but temporary, gasoline price spikes have occurred in various areas throughout the U.S. Since the mid-1990s, consumers on the West Coast, especially in California, have observed that their gasoline prices are usually higher than elsewhere in the U.S.


Rising average gasoline prices and gasoline price spikes command our attention. What causes high gasoline prices like those of 2004 and 2005? What causes gasoline price spikes? These important questions require a thorough and accurate analysis of the factors – supply, demand, and competition, as well as federal, state, and local regulations – that drive gasoline prices, so that policymakers can evaluate and choose strategies likely to succeed in addressing high gasoline prices.


This Report provides such an analysis, drawing upon what the Federal Trade Commission (FTC) has learned about the factors that can influence average gasoline prices or cause gasoline price spikes. Over the past 30 years, the FTC has investigated nearly all oilrelated antitrust matters and has held public hearings, undertaken empirical economic studies, and prepared extensive reports on oil-related issues, such as the Midwest gasoline price spike in June 2000. Since 2002, the staff of the FTC has monitored weekly average retail gasoline and diesel prices in 360 cities nationwide to find and, if necessary, recommend appropriate action on pricing anomalies that might indicate anticompetitive conduct.


Some observers suggest that oil company collusion, anticompetitive mergers, or other anticompetitive conduct – not market forces – may be the primary cause of higher gasoline prices. Anticompetitive conduct is always a possibility, of course. That is the reason for the antitrust laws. The FTC has been and remains vigilant regarding anticompetitive conduct in this industry. The FTC has taken action against proposed mergers in this industry at concentration levels lower than in other industries. Since 1981, the FTC has investigated 16 large petroleum mergers. In 12 of these cases, the FTC obtained significant divestitures and in the four other cases, the parties abandoned the transactions altogether after antitrust challenge. In 2004, the FTC staff published a study reviewing the petroleum industry’s mergers and structural changes as well as the antitrust enforcement actions the FTC has taken.1 In no other industry does the FTC maintain a price monitoring project such as its project to monitor retail gasoline and diesel prices. Most recently, on June 10, 2005, the FTC announced the acceptance of two consent orders that resolved the competitive concerns relating to Chevron’s acquisition of Unocal and settled the FTC’s 2003 monopolization complaint against Unocal. The Unocal settlement alone has the potential of saving consumers nationwide billions of dollars in future years.


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