Or, could have we resolved this with about 45 minutes in an econ 101 class (which we did, all across the country)? From Gas Prices Legitimate ...
Despite suspicions among consumers about rapidly rising gasoline prices and record oil industry profits, a federal investigation concluded Monday that the jump at the pump over the last year had not been the result of unlawful price manipulation.
The Federal Trade Commission said the sharp increase in fuel costs was attributable to market forces — namely big drops in supply and production and runs on inventories after major damage to refineries, ports and pipelines. In a report that Congress ordered last year after hurricanes struck the nation's refining hub on the Gulf Coast, the commission found no evidence of price collusion or improper reductions of inventory or supplies to increase company profits.
"The evidence collected in this investigation indicated that firms behaved competitively," the commission said.
Nevertheless, we must do something, anything to fix the problem:
Since the report did not find an industry villain, it was not likely to quell voter anger over the high gas prices. That is likely to add political pressure on Congress to take steps to lower prices or reduce the earnings of some oil companies. It could also provide some impetus for legislation, already adopted by the House, to outlaw price gouging and impose high penalties for violations.
We must outlaw price gouging even if there is no price gouging:
The commission said it found 15 examples of pricing by refineries, wholesale companies and retailers that technically fit the definition of "price gouging." (It defined gouging as a price increase in the month after the hurricanes that was not attributable to the additional costs caused by weather-related damage.) But it said that in nearly all of those instances, there was probably not gouging because of regional or local trends that justified the higher prices.
"Some price gouging by individual retailers did occur to a limited extent," the report said. "Local or regional market trends, however, seemed to explain the price increases in all but one case. Exceptionally high prices on the part of individual retailers generally were very short-lived." The report did not identify the retailer involved in the one case.
Mom and Dad are P.O.'d:
While the agency had been expected to reach the conclusions that it formally announced on Monday, senior commission officials said they expected the agency would come under criticism when the five commissioners appear before the Senate Commerce Committee on Tuesday.
Of course, the FTC could be a bunch of partisan hacks, bought and paid for by "big oil":
But Democrats in Congress, who have been the biggest critics of the commission for the way it monitors the industry, challenged the report's conclusions.
"The F.T.C. white paper on gas price gouging is a whitewash," said Senator Ron Wyden, Democrat of Oregon. "They find substantial numbers of refiners engaged in anticompetitive practices. They don't like the remedy Congress is proposing, namely a law on price gouging. But they just walk away from responsibility and don't propose a remedy themselves."
Senator Charles E. Schumer, Democrat of New York, also criticized the commission.
"It just defies belief that they didn't find price gouging because there is simply no price competition," he said. Mr. Schumer said that the Senate "could do a lot if it had the backbone."
"We could issue subpoenas, we could call in the executives, we could get to the bottom of this," he said. "The problem is that the Senate leadership believes, as the president does, that what's good for big oil is good for America."
This would make for great TV during an election year!
What's missing from the Dems response is a recognition that the price of the raw material for gasoline is set in international commodities markets and the price at the pump is set by the retailers themselves. The cases where it seems that price gouging actually occured appeared to be a few rogue, I could tell they were rogues because they wore eye patches, retailers and distributors.
Just a suggestion: In order to decrease gas prices we've got to figure out how to significantly ... significantly ... increase supply or decrease demand.
And another suggestion: Since high gas prices are a political problem*, not an energy, environmental or economic problem (except for a small percentage of households), government should do nothing to try to lower them. Whatever poorly conceived gas price policy we end up, will turn out worse than what we have now (i.e., price controls) or have no effect (i.e., windfall profits tax, price gouging laws).
*A problem for Republications ... An opportunity for the Democrats!