Karen Matusic | 202-682-8118 | matusick@api.org
WASHINGTON, August 6, 2009 - The American Petroleum Institute issued the following statement on the Federal Trade Commission’s new petroleum market “price manipulation” rule:
“We are concerned the new rule could lead to a less competitive market that would ultimately not be in the best interest of American consumers of gasoline, diesel and other petroleum products. It could discourage companies from providing information to the marketplace.
“Unlike other unfair or deceptive acts or practices, for which the penalty per violation under the FTC Act is $11,000, the maximum penalty here is nearly 100 times greater - $1 million - and it compounds each day until a violation is rectified. This clearly is an overreaction by the FTC when strong deterrents already are in place. We are pleased that the commission recognized the need to provide 90 days for industry to design and implement compliance programs.
“API member companies believe in an open and transparent marketplace. There have been numerous and extensive FTC investigations of the petroleum industry that have not uncovered any evidence that market manipulation has distorted petroleum markets or harmed consumers. In fact, these investigations found that prices are primarily determined by supply and demand fundamentals. Last summer’s $4 a gallon gasoline price was essentially the result of higher costs to produce gasoline. Higher crude prices as a result of a tight global supply and demand situation led to higher prices at the pump. It is important to note that lower demand for oil products have led to much lower prices for crude oil, gasoline and other fuels over the past year.
Updated: August 6, 2009