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Eight States Call for Investigation to See If Gas Prices are Illegally Inflated

May 25, 2004

Attorneys general in eight states asked the Bush administration on May 20 to join them in investigating whether oil companies are illegally pushing up gasoline prices, according to Reuters.In a letter to President Bush, the group asked him to direct U.S. Attorney General John Ashcroft "to join with us in investigating whether the oil and gas industries are colluding to drive up the cost of gasoline." The letter was signed by officials from Calif., N.Y., Conn., Ariz., Minn., R.I., Iowa, and Ark. The national retail price for gasoline averaged $2.02 a gallon on May 17, although pump costs in many states are much higher. Oil companies blame high prices on strong consumer demand, federal environmental regulations that require many gasoline blends, the difficulty in building new refineries and high crude oil prices that account for about half the cost to make gasoline. It is not illegal under U.S. law for a company to act on its own to restrict supplies or close a refinery that may lead to higher pump prices. Oil companies are also permitted to practice so-called "zone pricing," where they charge different gasoline prices in a specific location or city, which often result in pump costs being higher at service stations located just blocks apart.
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