State probe finds no gas price manipulation
- Published Wednesday, April 2, 2003, by the Associated Press
State's probe into higher gas prices finds no manipulation
SACRAMENTO (AP) -- Recent price spikes in gasoline and natural gas
prices were not the result of market manipulation, two state agencies
concluded in a report, but officials say they'll continue to watch
California's prices closely.
Gasoline and natural gas prices rose sharply in March, prompting Gov.
Gray Davis to order the California Energy Commission and the
California Public Utilities Commission to investigate.
The report was scheduled to be released today.
Retail gasoline prices peaked mid-March at an average of $2.15 per
gallon, said William Keese, chairman of the California Energy
Commission. Even though wholesale prices have dropped about 42 cents
per gallon since then, retail prices have only dropped an average of
one cent, he said.
Prices should be under $2 at most pumps at the end of this week,
and "if they are not, we'll be concerned," Keese said, adding that
it's not uncommon for prices to rise more rapidly than they fall.
The spike in gasoline was due to several factors -- including the
doubling of crude oil prices because of uncertainty about war in the
"The cost increases that we have seen from crude oil shouldn't
reflect that high a price," Keese said.
Other factors included an oil strike in Venezuela last year that cut
supplies, a cold winter in the eastern states increased demand for
heating oil and delays in refinery maintenance in California.
Natural gas prices generally run higher in the winter when demand is
greater, said PUC Commissioner Michael Peevey.
"We didn't find any manipulation in natural gas prices," he
said, "but a repetition of a pattern we've seen in California before
where there's a sharp price spike due to conditions outside the
The cold weather conditions in the East also contributed to
California's higher natural gas prices, officials said. When
consumers there are willing to pay higher prices "that sucks the gas
in that direction rapidly, and California ends up having to pay,"
The report doesn't recommend the attorney general investigate the
price increases, saying "the Energy Commission has no evidence to
claim that any refiners are exercising market power."
Davis said the state would continue to monitor natural gas and
gasoline markets "to ensure that no energy companies pull Enron-like
tricks to artificially drive up the price of energy."