FTC chief vows ‘vigilant oversight’ of California gas price spikes

Federal Trade Commission Chairman Jon Leibowitz said Wednesday that the agency will “remain vigilant “ and “wont hesitate to act” if market manipulation is behind the recent surge in California gasoline prices.

Pump prices in the Golden State recently surged almost 50 cents in one week and currently average $4.67 per gallon for regular grades. The spike has prompted senior Democrats to call for an FTC investigation.

“We are committed to ensuring competitive energy markets through the enforcement of the antitrust laws, and the new authority Congress gave us to address manipulative practices. We will remain vigilant in our oversight responsibility, and if we see a violation of the laws that we enforce, we won’t hesitate to act,” Leibowitz said in a statement.

A bipartisan 2007 energy law gave the regulators new powers to crack down on manipulation in petroleum markets.

California’s gasoline market and refineries have been hit by woes including a recent power outage that slowed production at an Exxon refinery.

AAA, in its weekly analysis Monday, noted that California already faced low supplies approaching the Oct. 31 end to the summer-blend gasoline requirements.

But the Exxon refinery has resumed normal operations, and Gov. Jerry Brown (D) over the weekend issued an order allowing the early transition to winter-grade gasoline in the state.

Average prices have begun coming down, according to AAA, which relies on data from the Oil Price Information Service.

Rep. Henry Waxman (D-Calif.), who has sought an FTC inquiry, told the commission in a letter that the tight market conditions may have created openings for abuse.

“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,” he wrote Tuesday.

The price surge has also caught the attention of other lawmakers.

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.

Leibowitz, in his statement, said the commission is keeping a watchful eye.

“The Commission is keenly aware of recent gasoline price spikes in California, and fully appreciates the strain that high gasoline prices place on individual consumers who have less money for other necessities, and on the economy as a whole,” he said.