Feds find no evidence of post-Katrina price manipulation

| 5/23/2006

The Federal Trade Commission said it has found no evidence of price manipulation by oil companies in the wake of Hurricane Katrina.

In its report, released on Tuesday, May 23, the FTC said it did find 15 examples of pricing at the refining, wholesale or retail level that do meet the definition of price-gouging as defined by the FTC’s appropriations legislation for fiscal year 2006.

Of those 15, seven were refiners, two were wholesalers and six were retailers.

That legislation defined price-gouging as any price in an area designated as a national disaster area or in any other area where price gouging complaints were filed because of Hurricane Katrina that “exceeded the average price (of fuel) in that area for the month of August, 2005.”

However, the report also found that “other factors, such as regional or local market trends” appeared to explain those prices in almost all of the cases.

The report also restated the FTC’s position against federal price gouging legislation, adding that it could cause more problems than it solves and that competitive market forces should be allowed to drive prices at the pump.

The report concluded that there was no evidence to suggest that refiners manipulated prices, nor have refinery expansion decisions over the past 20 years been part of a coordinated effort to manipulate prices.

In addition, the report said that there was no evidence to suggest that oil companies “reduced inventory to increase or manipulate prices or exacerbate the effects of price spikes generally, or due to hurricane-related disruptions in particular.”