Gasoline Price Changes - Federal Trade Commission

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GASOLINE PRICE CHANGES: a mong owners of major brands to raise gasoline prices. During the FTC Western States Investigation, however, the evidence revealed that brand-name refiners used different territorial 93 restriction methods and redlined the same geographic areas differently. The use of different methods and geographic areas does not support a theory that branded refiners coordinate on territorial restrictions to raise retail gasoline prices. The Commission’s Western States Investigation uncovered no evidence that territorial restrictions gave any refiner the ability profitably to raise price or reduce output and no direct evidence of competitive harm. 94 Moreover, the Supreme Court has recognized the likelihood that reductions in intrabrand competition (e.g., competition among gas stations selling the same brand) will stimulate horizontal, or interbrand, competition (e.g., competition among gas stations selling different brands). ient cation of 95 Territorial restrictions may also allow a branded refiner to implement a more effic distribution system. For example, absent territorial restrictions, “jobbers could cherry-pick good sites within the marketer’s distribution system and deliver to those stations, increasing distribution costs for the marketer. Dual distribution also could lead to inefficient dupli assets by the marketer and jobber.” 96 Absent evidence of a conspiracy among refiners, the Commission would likely be required to analyze territorial restrictions under the antitrust rule of reason. son 97 A rule of rea analysis requires a balancing of potential pro- and anti-competitive effects. Nonetheless, the Commission will remain vigilant against any potential anticompetitive effects of territorial restrictions. The Commission will continue to assess any evidence of possibly anticompetitive territorial restrictions to evaluate the likelihood of harm to gasoline consumers. Endnotes 1. JOHN M. BARRON ET AL., CONSUMER AND COMPETITOR REACTIONS: EVIDENCE FROM A RETAIL-GASOLINE FIELD EXPERIMENT (Mar. 2004), at http://ssrn.com/abstract=616761. 2. Id. at 13, 15. 3. Id. at 30-31. 4. See generally A Report on Retail and Wholesale Gasoline Prices in the Miami/Globe and Phoenix Markets: Hearing before the Subcomm. on Antitrust, Monopolies and Business Rights, Senate Comm. on the Judiciary, 102nd Cong., 483-84 (May 6, 1992) (statement of John Umbeck) (an analysis of wholesale and retail gasoline price differences in the Globe/Miami and Phoenix areas of Arizona). 5. See BARRON, supra note 1, at 30-31; GOV’T ACCOUNTABILITY OFFICE (GAO), GAO/RCED-00-121, MOTOR FUELS: CALIFORNIA GASOLINE PRICE BEHAVIOR 20 (2000), available at http://www.gao.gov/new.items/ rc00121.pdf. 128 FEDERAL TRADE COMMISSION, JUNE 2005
6. GAO, supra note 5, at 20. 7. Id. THE DYNAMIC OF SUPPLY, DEMAND, AND COMPETITION 8. Philip K. Verleger, Remarks at the Federal Trade Commission Conference on Factors that Affect Prices of Refined Petroleum Products 36 (Aug. 2, 2001) [hereinafter, citations to conference transcripts include the speaker’s last name, transcript date, and page cite(s)]. Transcripts of the Conference and presentations are available at http://www.ftc.gov/bc/gasconf/index.htm. 9. Earl Bolender, What's (Way) Up With Gas Prices?, MT. SHASTA NEWS, Sept. 05, 2001; John Diehm, Summer Could Bring Soaring Gas Prices, MT. SHASTA NEWS, Apr. 11, 2001. 10. A “rack” is the facility for dispensing refined petroleum products from storage in a terminal to trucks for subsequent delivery to retail outlets. 11. To ensure that the price differences did not result from other phenomena, the study uses San Francisco as the control region. San Francisco serves as the control region and base measure because a majority of the gasoline that is supplied to the rack in Chico comes from refineries in the San Francisco area. In addition, gasoline retailing in San Francisco appears to have experienced less change than other areas of the state. 12. Yreka Gas Prices Remain High, SISKIYOU DAILY NEWS (Online Edition), July 24, 2002. 13. Devanie Angel, Gas Pains, CHICO NEWS & REV., Jan. 30, 2003. 14. BUREAU OF ECON., FED. TRADE COMM’N (FTC), THE PETROLEUM INDUSTRY: MERGERS, STRUCTURAL CHANGE, AND ANTITRUST ENFORCEMENT 232 (2004) [hereinafter PETROLEUM MERGER REPORT], available at http://www.ftc.gov/os/2004/08/040813mergersinpetrolberpt.pdf. 15. Diehm, supra note 9; Bolender, supra note 9. 16. These prices reflect the average of retail prices collected and published by the Oil Price Information Service (OPIS), a private company. 17. PETROLEUM MERGER REPORT, supra note 14, at 232. See also Bob Frei & Jim Peters, New Millennium Gasoline Retailing: Challenge to the Incumbents, NAT’L PETROLEUM NEWS, May 2000, at 54; William J. McAfee, From “Circle Service” to Do-It-Yourself: 1950s to Today, NAT’L PETROLEUM NEWS, May 2002, at 66. 18. PETROLEUM MERGER REPORT, supra note 14, at 246 tbl.9-5. 19. Id. at 233. 20. Id. at 240. 21. Industry, CONVENIENCE STORE NEWS, June 6, 2003. 22. Hogarty 5/9 at 22. 23. PETROLEUM MERGER REPORT, supra note 14, at 239. 24. Id. at 238-39. CHAPTER 5: STATE & LOCAL POLICIES, & VERTICAL INTEGRATION 129
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Federal Trade Commission DEBORAH PL
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GASOLINE PRICE CHANGES: The vast ma
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GASOLINE PRICE CHANGES: $ The World
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GASOLINE PRICE CHANGES: expect incr
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GASOLINE PRICE CHANGES: Figure 3-6:
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GASOLINE PRICE CHANGES: $ Increased
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GASOLINE PRICE CHANGES: $ Since 199
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GASOLINE PRICE CHANGES: increase lo
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GASOLINE PRICE CHANGES: England and
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Table of Contents EXECUTIVE SUMMARY
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C. In 2004, the Geopolitical Outloo
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CHAPTER 4: SUPPLY, DEMAND, AND COMP
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3. Gasoline prices in the East Coas
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CHAPTER 1. SUPPLY (INFLUENCED BY OP
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To obtain the additional supply the
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THE DYNAMIC OF SUPPLY, DEMAND, AND
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Price (Cents per Gallon) 220 200 18
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words, short-run demand for gasolin
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Endnotes THE DYNAMIC OF SUPPLY, DEM
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CHAPTER 2. WORLDWIDE SUPPLY, DEMAND
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Thousand Barrels per Day 18,000 16,
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Million Barrels per Day 0.9 0.8 0.7
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such as ethane, ethylene, and propa
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CHAPTER 3. SUPPLY, DEMAND, AND COMP
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Year-over-year Percentage Change in
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Capacity (Million Barrels per Calen
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Endnotes THE DYNAMIC OF SUPPLY, DEM
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CHAPTER 4. SUPPLY, DEMAND, AND COMP
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Price Difference (Cents per Gallon)
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Page 131 and 132: CHAPTER 5. STATE AND LOCAL POLICIES
Page 133 and 134: Percentage of Customers Lost to 1%
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Page 137 and 138: Share (Percent) 80 70 60 50 40 30 2
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Page 155: THE DYNAMIC OF SUPPLY, DEMAND, AND
Page 165: Herfindahl-Hirschman Index (HHI) Th
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Gasoline Price Changes - Federal Trade Commission

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