Washington AG: No gas price gouging found in state

By Chris Rizo | Apr 17, 2008

Rob McKenna

OLYMPIA, Wash. (Legal Newsline)-Washington Attorney General Rob McKenna on Thursday said a year-long investigation into gasoline pricing found that consumers in the Evergreen State have not been the victims of price gouging, at least not by the domestic oil market.

"We are suffering at the pump and we're paying higher prices for gasoline because we're competing with the Chinese, the Indians and people in other developing and developed countries, but we are also benefiting from those economic forces," McKenna said in a conference call with reporters.

McKenna noted that the same market forces that are driving up gasoline prices are similarly raising world prices of such Washington-produced products as wheat, Washington apples, Boeing airplanes and computer software.

But unlike wheat, McKenna said oil is not traded in a free market.

Although McKenna said he did not find illegal market manipulation in Washington's gasoline market, he decried OPEC for manipulating oil prices.

"Oil is bought and sold under the significant influence and control of the largest cartel in the world," McKenna said, referring to the Organization of the Petroleum Exporting Countries, whose 13 member-nations are responsible for more that 35 percent of global oil production.

"OPEC is in fact fixing prices by controlling output and agreeing on crude oil prices," he said.

The attorney general said after gasoline prices began to climb in the spring of 2007, his office, the governor's office and the Department of Community, Trade and Economic Development began investigating factors that influence regional prices in the state.

McKenna noted that gas prices have skyrocketed as the result of record crude oil prices and increasing worldwide demand for oil products.

"The cost of crude accounted for about 39 percent of the price of a gallon of gas in May 2007, compared to 62 percent in December 2007," said the report by University of Washington economist Keith Leffler.

Costs for oil refinement has also continued to increase, the 67-page report noted.

"After accounting for crude oil costs and taxes, only about 67 cents of the current per-gallon price of gasoline remains to compensate refiners for production, transportation and other costs," the report found.

The retail price of gasoline is also affected by price differences from location to location, the report said. It found that on average, the gross retailing differential accounts for about 9 percent of the current retail price.

The report came the same day that a Pacific Northwest think-tank said motorists in Washington, Oregon and Idaho have reduced their per-capita gas consumption by 11 percent from 1999 to 2007.

The study by the Seattle-based Sightline Institute found that motorists are on average saving nearly a gallon a week.

"In the face of higher prices, we're taking steps to downshift our gasoline consumption, and it's paying off," said the group's research director, Clark Williams-Derry. "This is good news for the climate, our health, and for our pocketbooks."

He noted, "An 11 percent decline in consumption is like every driver taking an annual, five-week holiday from their cars."

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

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