Waxman wants federal probe of California gas price spike

A powerful House Democrat wants the Federal Trade Commission to find out if market manipulation is boosting California gasoline prices, which soared a half-dollar per gallon in the last week.

Tuesday’s letter from Rep. Henry Waxman (D-Calif.) to the FTC boosts political pressure on regulators to probe prices that, according to AAA, jumped 49 cents in a week to a current average of $4.67-per-gallon for regular gasoline.

“A decade ago, market manipulation by Enron sent California’s electricity prices soaring. While we do not know whether this is a parallel situation, we must make sure California consumers are protected,” writes Waxman, the top Democrat on the House Energy and Commerce Committee.

“That is why I am requesting an independent investigation by the FTC that examines the causes of the current gasoline price spike in California,” adds Waxman, who is a key ally of House Speaker Nancy Pelosi (D-Calif.).

Sen. Dianne Feinstein (D-Calif.) called for an FTC probe Sunday, while on Monday Sen. Barbara Boxer (D-Calif.) separately urged the multi-agency Oil and Gas Price Fraud Working Group, which is led by the Justice Department, to investigate.

AAA, in its weekly analysis Monday, noted that California already faced low supplies approaching the Oct. 31 end to the summer-blend gasoline requirements, a situation worsened by a power outage at an ExxonMobil refinery in the state.

While Exxon announced Friday that its Torrance, Calif., refinery had resumed normal operations, motorists were “already feeling the pain” of soaring prices, AAA noted.

AAA said that lower prices are likely on the way after the refinery’s resumption of normal operations and a waiver from Gov. Jerry Brown (D) over the weekend that allows early sales of winter-grade gasoline.

Waxman’s letter notes a series of problems and maintenance issues at California refineries – including the Aug. 6 fire at a Chevron refinery. Those incidents, combined with low inventories, are commonly cited as the reasons for high prices in the Golden State.

But he noted that those conditions may have made the California gasoline market ripe for manipulation or price gouging.

“Periods of tight gasoline supply require special vigilance because of the opportunities for market manipulation – especially when individual market participants possess substantial market share as is the case in California. When Los Angeles consumers see their gasoline prices skyrocket by 50 cents per gallon over the course of one week, something is wrong,” Waxman’s letter to FTC Chairman Jon Leibowitz states.