Gasoline Price Changes - Federal Trade Commission

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GASOLINE PRICE CHANGES: 25. See Michael G. Vita, Regulatory Restrictions on Vertical Integration and Control: The Competitive Impact of Gasoline Divorcement Policies, 18 J.REG. ECON. 217 (2000) (noting that in 1993 – the last year for which data were available as of the time of the article – the price of regular unleaded gasoline in states that banned self-service was $0.03 per gallon higher than in states that allowed self-service); see also Ronald N. Johnson & Charles J. Romeo, The Impact of Self-Service Bans in the Retail Gasoline Market, 82 REV. ECON. & STAT. 625 (2000) (finding the cost of self-service bans to be $0.03 to $0.05 per gallon). 26. See Rod W. Anderson & Ronald N. Johnson, Antitrust and Sales-Below-Cost Laws: The Case of Retail Gasoline, 14 REV. OF INDUS. ORG. 189 (1999); J. Isaac Brannon, The Effects of Resale Price Maintenance Laws on Petrol Prices and Station Attrition: Empirical Evidence from Wisconsin, 35 APPLIED ECON. 343 (2003). 27. See, e.g., Star Fuels Mart, LLC v. Sam’s E., Inc., 362 F.3d 639, 648 n.3 (10th Cir., 2004) (despite no evidence of harm to competition under a Sherman Act standard, the court upheld a preliminary injunction under the Oklahoma Unfair Sales Act, which forbids retailers from selling fuel below cost; the court explained that “[t]he purpose of the OUSA . . . is simply to prevent loss leader selling and to protect small businesses.”). 28. See, e.g., OREGON REV. STAT., ch. 480, § 480.315 (including, among others, the following reasons for the prohibition: “dispensing of [gasoline] by dispensers properly trained in appropriate safety procedures reduces fire hazards”; “crime and slick surfaces . . . are enhanced [at self-service stations] because Oregon’s weather is uniquely adverse, causing wet pavement and reduced visibility”; “the increased use of self-service at retail in other states has contributed to diminishing the availability of automotive repair facilities at gasoline stations”; and “self-service dispensing at retail contributes to unemployment, particularly among young people”). Although these reasons might seem equally applicable to motorcycles, Oregon allows a motorcycle operator to dispense gasoline. Id. §480.349. 29. Johnson & Romeo, supra note 25, at 632. 30. Johnson & Romeo, supra note 25; see also Donald Vandegrift & Joseph A. Bisti, The Economic Effect of New Jersey’s Self-Service Operations Ban on Retail Gasoline Markets, 24 J.CONSUMER POL’Y 63 (2001). 31. Kwik Trip, Inc., No. MI 2402972 ML (Cease & Desist/Consent, May 24, 2004); Murphy Oil USA, Inc., No. MI 2402973 ML (Cease & Desist/Consent, May 24, 2004); Minn. Dep’t of Commerce, Enforcement Actions: Miscellaneous (May 31, 2004), at http://www.state.mn.us/mn/externalDocs/Commerce/ Enforcement_Actions_May_2004_050704120541_EnfAct053104.htm. 32. Minn. Dep’t of Commerce, supra note 31; see also Mark Brunswick, Selling Gas For Too Little Can Be Costly; State Regulations Are Penalizing Some Retailers Who Don’t Charge Enough For Fuel, MINNEAPOLIS STAR- TRIBUNE, June 2, 2004, at 1B. 33. See, e.g., Anderson & Johnson, supra note 26, at 203; Robert Fenili & William Lane, Thou Shalt Not Cut Prices! Sales-Below-Cost Laws for Gas Stations, 9 REGULATION, Sept./Oct. 1985, at 31-32. But see JAMES ALM ET AL., DO MOTOR FUEL SALES-BELOW-COST LAWS LOWER PRICES? (Andrew Young School of Pol’y Stud., Working Paper, 2004) (finding that gasoline prices in states that have adopted such laws are about 1 cent lower 5 years after the law is imposed), at http://aysps.gsu.edu/publications/2004/alm/sales_below_cost.pdf. 34. Williams 8/2 at 153-54. The Commission staff, in letters to state officials, has provided economic advice opposing the passage of state gasoline pricing laws that would place stricter bounds on retailers’ pricing conduct than are imposed by the existing federal prohibition against predatory pricing. These letters pointed out that anticompetitive below-cost pricing already is illegal under the federal antitrust laws – and, according to scholarly commentary and court decisions, rarely occurs in any event – and that the proposed state legislation would penalize some forms of price-cutting that benefit consumers. See Letter from the FTC’s Bureau of Competition, Bureau of Economics, and Office of Policy Planning to The Honorable Demetrius C. Newton, Speaker Pro Tempore, Alabama 130 FEDERAL TRADE COMMISSION, JUNE 2005
THE DYNAMIC OF SUPPLY, DEMAND, AND COMPETITION State House of Representatives (Jan. 29, 2004) (regarding the “Alabama Motor Fuels Marketing Act”), at http://www.ftc.gov/be/v040005.htm; Letter from the Bureau of Competition and the Office of Policy Planning to Governor George E. Pataki, State of New York (Aug. 8, 2002) (concerning N.Y. Bill No. S04522, the “New York Motor Fuel Marketing Practices Act”), at http://www.ftc.gov/be/v020019.pdf; Letter from the Bureau of Competition and the Office of Policy Planning to The Honorable Robert F. McDonnell, House of Delegates, Commonwealth of Virginia (Feb. 15, 2002) (concerning Va. Senate Bill No. 458, “Below-Cost Sales of Motor Fuels”), at http://www.ftc.gov/be/v020011.htm. 35. See supra, Chapter 4(III). 36. PETROLEUM MERGER REPORT, supra note 14, at 222. This price includes both storage (which is calculated on a per-month basis) and dispensing components. 37. The last year for which data are available is 1997. U.S. CENSUS BUREAU, Economic Census of Wholesale Trade: Subject Series, tables entitled: “Petroleum Bulk Stations by Type of Stations for States” and “Bulk Storage Capacity by Type of Product for States” (1982, 1987, 1992, 1997). The only publicly available data on trends in terminal concentration are not reliable. The Bureau of the Census tracks the number of product terminals nationally and by state. The collected data refer to the number of terminals owned by “refiner-marketers” and by “others”; this distinction corresponds roughly to that between proprietary and public terminals. 38. See NAT’L PETROLEUM COUNCIL, U.S. PETROLEUM PRODUCT SUPPLY INVENTORY DYNAMICS 37-38 (1998). 39. PETROLEUM MERGER REPORT, supra note 14, at 223. 40. Id. at 223-24. 41. Colonial Pipeline Co., Terminalling Services, at http://www.colpipe.com/sv_ts.asp (last visited June 28, 2005). 42. Press Release, Buckeye Partners, L.P., Buckeye Partners Acquires BP Amoco Terminal (Mar. 21, 2000) (on file with author, at http://www.buckeye.com). 43. Kinder Morgan to Purchase Five Terminals, MODERN BULK TRANSPORTER, Oct. 1, 2003. 44. Press Release, Magellan Midstream Partners, L.P., Magellan Midstream Partners Completes Acquisition of Strategic Pipeline Systems (Oct. 1, 2004) (on file with author, at http://www.magellanlp.com). 45. PETROLEUM MERGER REPORT, supra note 14, at 228. Note that some refiners may also be purchasing terminal assets. 46. Branded jobbers purchase gasoline at the rack from branded wholesale gasoline marketers. In turn, these jobbers sell the gasoline to stations that are licensed to sell under the brand. Unbranded jobbers purchase unbranded gasoline at the terminal rack for delivery to retailers. 47. For a more complete description of direct and jobber distribution systems, see PETROLEUM MERGER REPORT, supra note 14, at 226-31. 48. ENERGY INFO. ADMIN. (EIA), U.S. DEP’T OF ENERGY, DOE/EIA-0487(03), PETROLEUM MARKETING ANNUAL 2003, at 221 (2004), at http://tonto.eia.doe.gov/FTPROOT/petroleum/048703.pdf. See also PETROLEUM MERGER REPORT, supra note 14, at 226. 49. PETROLEUM MERGER REPORT, supra note 14, at 230-31, 242-44 tbls.9-2 to 9-3. CHAPTER 5: STATE & LOCAL POLICIES, & VERTICAL INTEGRATION 131
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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 165: Herfindahl-Hirschman Index (HHI) Th
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