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A significant development this week…
The U.S. Federal Trade Commission is investigating how it can crack down on oil and gas mergers and whether gas station franchises are artificially sending retail gasoline prices up, according to a letter sent to the White House seen by Bloomberg.
The investigation follows the U.S. Biden Administration’s plea to OPEC to turn on the taps in an effort to rid itself of the stench of high gasoline prices at a delicate economic time for many Americans.
The FTC Chair Lina Khan has directed staff to come up with new legal theories that would give the FTC cause to target gas station deals that it feels are disadvantageous and even to investigate instances of price collusion among gas station chains—specifically targeting national chains that buy up family-owned businesses.
“Over the last few decades, retail fuel station chains have repeatedly proposed illegal mergers, suggesting that the agency’s approach has not deterred firms from proposing anticompetitive transactions in the first place,” Khan said in the letter.
The investigation in part will attempt to determine if major gas station chains force their franchisees to sell gas at inflated prices. Franchisees mostly have no control over prices at the pump.
The reason behind the push is clear: high prices at the pump, which is an unfavorable situation for any new administration. But a series of consolidations in the industry in recent years has also led to a quest to tighten up requirements for mergers.
Gasoline prices have soared since the start of the year and the start of Biden’s term in office. Since then, retail gasoline prices have risen nearly 50 percent.
One of the mechanisms for determining instances of collusion in setting higher gas prices will be to review the divergence between crude oil prices and retail gasoline prices.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.