Wyden says he has evidence of gasoline price-fixing in the West

Thursday, June 3, 1999 | 9:42 a.m.

In a report he hopes will lead to a federal antitrust investigation, the Oregon Democrat said gasoline companies are arbitrarily charging neighboring stations different prices for the same grades of gas and are discriminating against small gas station operators.

"All this comes together to reduce choice, concentrate power among a handful of oil company giants and to exploit consumers," Wyden said.

"The West really seems to be singled out for these kinds of practices," Wyden said. "When you can squeeze the dealer at the pump and stick it to the consumer, you drive out competition. That's a fertile environment for jacking up the prices even more."

Wyden noted that while gasoline prices among competitors on the East Coast vary from 1 to 4 cents, the price differential in the West stands at 15 cents now and has been as high as 60 cents.

The average for regular in California is $1.64 a gallon, and in some parts of the state more than $2 for premium grades. In Oregon, prices for regular gasoline rose from an average of $1.09 in December, to $1.60 in April, to $1.41 now.

Oil companies have blamed the price increases on a combination of factors, including refinery fires in California and global agreements to cut oil production. They also said that the summer vacation season has pumped up demand for gas as families hit the road on cross-country trips.

"It's a layer cake of effects," said Fred Gorell, spokesman for the San Fransisco-based Chevron Corp., one of Oregon's largest gasoline suppliers.

"It's important to remember," he said, "that the many, many investigations into gas pricing that have been completed in the past have always reached the same conclusion - that it's the marketplace at work."

Among the charges Wyden wants investigated is that oil companies are using predatory pricing to unfairly undercut competitors and that they are favoring gas stations with direct financial ties to the home company at the expense of small-time gas stations.

Wyden said he will likely discuss the evidence he's collected with California Attorney General Bill Lockyer, who has opened his own investigation into alleged price gouging by oil companies.

Although he declined to identify the industry insiders he's corralled, Wyden said his report details substantial evidence that price-fixing is going on.

"They are intimately involved with the gasoline business," Wyden said of his witnesses, "and they are frightened."

In April, Wyden asked Justice Department officials to look into why gas prices had risen by as much as 31 percent in less than a month. Wednesday's report was intended to aid them in the effort.

Chevron's Gorell noted that prices have stabilized in recent months and may be held down as the oil supply is buoyed by new tanker shipments and refineries coming back on line. But he said the worldwide cutback in oil production should keep prices from falling to last year's lows.

"Unless market prices for crude come down," he said, "pump prices will settle on a new, but higher, price floor."