Two-day Event Focusing on Factors that Affect Prices of Refined Petroleum Products
Welcoming participants and attendees to the Federal Trade Commission's second public conference on factors that affect prices of refined petroleum products, Chairman Timothy J. Muris today said that the FTC has developed a statistical model that is being used to identify and monitor "unusual" gasoline price movements in 360 cities across the country. This model "will allow FTC staff to identify and track gasoline price spikes on a 'real-time' basis and to identify as quickly as possible the contributing factors," Muris said. The FTC also will publish two reports later this year on the petroleum industry in the United States. The first report, he said, will detail merger and acquisition activity by major petroleum companies and structural changes in the industry, while the second will provide an extensive review of the factors affecting the level and volatility of prices of refined petroleum products and their trends nationwide.
These activities build on the many FTC activities involving the oil and refined petroleum products industries, the most recent of which was a public conference held at the Commission in August 2001. This month's conference is quite timely, the Chairman said, as gasoline prices again have been in the news and also were the subject of a recent Congressional hearing. "As prices at the pump sharply rise and fall with seemingly increasing regularity, consumers raise questions about the causes of price volatility," he said. "They also ask what drives the average level of gasoline prices."
Such public forums provide an excellent opportunity for the Commission to gather information outside of the law enforcement framework, Muris said. While the FTC has recently completed investigations of such prices spikes and declines on the West Coast and in a number of Midwestern states, "we have broadened our focus . . . to analyze in a more comprehensive way the central factors that can affect the level and volatility of refined petroleum product prices throughout the United States."
In outlining the projects the FTC has undertaken, the Chairman cited three categories of work: 1) research, 2) reports, and 3) review and monitoring. Research includes an assessment of the information gathered at all public forums, with each conference "providing an opportunity to learn from others about these central issues." Muris also cited the "very ambitious and important" project recently announced by Senator Levin and the Majority Staff entitled "Gas Prices: How are They Really Set" as having "raised some very important issues about the U.S. refining and marketing industries."
Regarding FTC reports, the Chairman, for the first time, detailed two new projects due for release later this year. The first will use information gathered from 1985 to 2000 to update the FTC's previous oil merger reports of 1982 and 1989, and the second will examine the complex interaction of factors that affect the prices of refined petroleum products.
Finally, Muris said that the Commission's monitoring efforts will include the use of a statistical model to track gasoline price spikes on a "real-time" basis and identify the contributing factors as quickly as possible. The model will use data from the Oil Price Information Service on daily average retail prices for approximately 360 cities, as well as data on daily average wholesale (rack) prices for 20 key urban areas across the country, representing approximately 40 percent of all gas stations in the United States.
Concluding his remarks, the Chairman said, "[These] issues are extremely important to U.S. consumers and the U.S. economy, and they merit significant attention . . . let us begin today's discussion of these issues and further enhance everyone's understanding of them."
The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: email@example.com; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
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