Senate Democrats

McCaskill, Senate Democratic Leadership Call For Investigation Into Gasoline Price Fixing By U.S. Refiners

Senators Send Letter To Federal Regulators Expressing Concern Over Signs of Refiners Stockpiling Oil To Keep Prices High

Refiners’ Output Has Dropped 900K Barrels Per Day Since Last Year, But Profit Margins Have More Than Doubled In That Span

Washington, D.C.—With new reports suggesting that refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high, Senator Claire McCaskill spearheaded a letter from Senate Democrats to the Federal Trade Commission today urging an investigation into potential price fixing.

Last week, new data released by the Energy Information Administration showed that refiners are producing at just 81 percent of their capacity—a drop of 900,000 barrels per day compared to last year’s output. Yet the refiners’ profit margins have more than doubled over that same span.

“At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices the idea that refiners may be manipulating the market to keep prices artificially high is offensive. It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation,” wrote Senators McCaskill, Harry Reid, Dick Durbin, Charles E. Schumer and Patty Murray.

The senators’ letter followed a report in the Kansas City Star that analyzed the ballooning profit margins recorded by oil refiners in recent months.

Specifically, concerns have been raised that U.S. gasoline inventories remain below average and profit margins continue to rise. Since January 2011, U.S. refiners have seen over a 90 percent increase in their refining margins.

The full text of the letter is below:

May 17, 2011

Jon Leibowitz, Chairman

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, D.C. 20580

Dear Chairman Leibowitz:

We write today to request the Commission begin an investigation into potential price fixing of gasoline by U.S. refiners.  Recent reports have indicated that U.S. refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line.  If true, this behavior is a direct affront to the American people who are still struggling with the economic downturn.  It is currently within the Federal Trade Commission’s (Commission) authority to review these allegations for any potential wrongdoing and to determine the impact these actions may have on gasoline prices both regionally and throughout the country.

The rise in the price of oil is certainly a driving factor behind the recent rise in gasoline prices, but concerns have been raised that while gasoline use is declining, U.S. gasoline inventories remain below average and refining margins continue to rise.  According to information posted by the Energy Information Administration U.S. refiners are using only 81.7 percent of their capacity, a decline of 7 percent from the same time last year.  Moreover, since the beginning of 2011 U.S. refiners have seen over a ninety percent increase in their refining margins. While some have argued that this increase is due to potential impacts from recent flooding along the Mississippi River, this cannot justify the steady increases in their margins since January of this year.

At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices, the idea that refiners may be manipulating the market to keep prices artificially high is offensive.  It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation.  Accordingly, we request that the Commission open a full investigation into these allegations of wrongdoing and to determine the impact this behavior, if confirmed, has on regional and national gasoline prices.

Thank you for your consideration of our request.  We look forward to hearing from you.

Sincerely,

CLAIRE MCCASKILL

United States Senator

HARRY REID

United States Senator

DICK DURBIN
United States Senator

CHARLES E. SCHUMER

United States Senator

PATTY MURRAY

United States Senator

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