Congressman Ed Markey seeks investigation of high gasoline prices
US Representative Edward J. Markey, citing falling crude oil but stubbornly high fuel prices, is calling on the Federal Trade Commission to investigate whether oil companies and refiners are manipulating gasoline prices in New England.
In a letter sent to the Commission on Friday, the Malden Democrat noted that benchmark West Texas Intermediate crude oil prices have fallen 7 percent since mid-September, from $99 a barrel to just over $92 on Thursday. But the average gas price in Massachusetts — about $3.89 for a gallon of regular unleaded — has risen 8 cents over the last month, according to AAA Southern New England. The current average is more than 40 cents higher than it was in mid-July, when crude prices were about the same as they are today.
“While oil prices have been falling in recent weeks, gasoline prices have not experienced commensurate declines,” Markey wrote. “I am therefore concerned that gasoline prices could be behaving abnormally due to price gouging or manipulation.”
Markey also expressed concern that heating oil prices may also have been manipulated. A federal forecast released earlier this week said consumers who heat with oil can expect to spend a record amount this winter, nearly $2,500.
“It is critical that any abnormalities in the gasoline markets be dealt with immediately,” Markey wrote in his letter. “If fuel prices are being kept unnaturally high, the consequences for consumers and our economy could be significant.”
The retail gasoline business is so competitive that it is unlikely price gouging is occurring, said Joe Petrowski, chief executive of the Cumberland Farms Gulf Oil Group.
“I think the possibilities of it are nil,” Petrowski said. “It’s nice that they [regulators] are looking but I think our political energy would be better spent making sure we keep refineries open.”
Chris Lafakis, a senior economist who covers energy for Moody’s Analytics, a forecasting firm in West Chester, Pa., said refinery profit margins — which are seasonal and tend to decrease at the end of the summer driving season — have been higher lately. He said he’s not sure why.
“I can’t say with absolute certainty why the refining profit margins are higher,” Lafakis said. “But I can tell you they have increased.”
Lafakis said the New England region could be seeing higher gasoline prices due to a rise in the cost of Brent crude oil, a global benchmark that he says affects Northeast fuel prices because much of the area’s oil is imported. Brent, which is produced in the North Sea, closed at $115.71 a barrel on Thursday, up nearly $4 from Monday.Erin Ailworth can be reached at email@example.com. Follow her on Twitter @ailworth.