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News arrow News arrow Local News arrow FEDERAL PROBE FINDS OREGON GAS PRICES SUSPECT

FEDERAL PROBE FINDS OREGON GAS PRICES SUSPECT Print E-mail
November 14, 2000 11:00 pm

WASHINGTON, D.C. A federal gas price investigation sparked by Sen. Ron Wyden, D-Ore., has found evidence of redlining and zone pricing in Oregon.

Wyden launched his own investigation into possible antitrust violations in the oil industry last year. His report revealed gas price discrimination in the Pacific Northwest.

Following up on Wydens probe, the Federal Trade Commissions Bureau of Competition launched its own investigation into anti-competitive gas pricing in Oregon.

Bureau Director Richard Parker sent Wyden a letter thanking him for his report.

That information provides evidence of redlining restrictions limiting the areas in which jobbers have been approved to sell branded gasoline, said Parker, And the use of zone pricing to charge different dealers different wholesale prices for branded gasoline.

In Oregon and elsewhere we have learned, as a result of leads that your office and others provided, he said, That oil companies do use redlining and similar practices.

Arrangements by which independent business people are prevented by agreement from competing in the marketplace raises serious questions under the antitrust laws.

Whether they are legal or not depends on additional factors such as market share and possible justifications.

Parker went on to say, Zone pricing can lead to situations in which nearby dealers are charged different wholesale prices, which may be reflected in retail prices.

These practices raise serious questions about their effects on competition in gasoline markets.

Parker cited Wydens example of an Oregon dealer who reported having to pay up to 17 cents more per gallon than at neighboring stations selling the same brand, after his station was placed in its own zone by a major oil company.

While these practices are certainly matters of concern, said Parker, proving an antitrust violation is not a simple matter.

Oil companies have offered spirited defenses of zone pricing and redlining, arguing that these practices are justified by legitimate business considerations.

Parker said the investigation into West Coast gasoline pricing would continue, and the evidence would be presented to the commission. The commission would then have several options. It could commence litigation, issue a report, ask Congress for legislation, or simply close the investigation.

Wyden said, Through anti-competitive practices like redlining and zone pricing, the big oil companies are siphoning the competition out of the gasoline market in Oregon.

These anti-competitive practices have contributed mightily to the loss of hundreds of gasoline stations in recent years.

The only way to get permanent gas pricing relief for Oregonians is to restore true competition to the gasoline market, and Ill keep working, over the objections of the oil lobby, to get the job done.

Wyden said that any reduction in competition risks driving prices even higher for consumers in the Pacific Northwest, who are already subject to some of the highest gas prices in the nation. A report from his office said Oregonians pay 25 cents above the national average, giving Oregon the third highest gas prices in the continental United States.

 

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