AG says no signs of fuel price gouging

Thursday, April 3, 2003 | 11:08 a.m.

CARSON CITY -- Attorney General Brian Sandoval said Wednesday that he has not found any evidence of gasoline price gouging in Nevada.

Spurred by a flood of complaints from motorists about record high gas prices, Sandoval began investigating gas prices last month.

Sandoval asked 13 oil companies to justify the increases and all of them responded, he said.

Sandoval said he is satisfied with the companies' explanations so far, and he has talked with other attorneys general across the nation about the problem, he said.

AAA, a road service agency that tracks nationwide gasoline prices and has over the years stood up for consumers when prices have appeared out of line, says Sandoval's conclusions are supported by nationwide and international trends.

"We have received a number of letters and calls from consumers with concerns over the high prices, and we have told a number of consumers that there are unusual factors such as high crude oil prices and the unique set of world events," AAA-Nevada spokeswoman Jenny Mack saidtoday.

"His (Sandoval's) findings are consistent with the market."

Economist Keith Schwer, director of the Center of Business and Economic Research at the University of Nevada Las Vegas, said given the evidence available to Sandoval, his findings that there is no gouging are valid.

"Prices are high all over the country under different delivery systems -- that would be one piece of evidence to support that there is no price gouging in Nevada," Schwer said. "Another is we have high taxes on gasoline because we have a lot of roads that need to be maintained.

"There always will be concern, however, because there has been a historic use of market power (by large monopolistic entities) in American business," Schwer said. "But he (Sandoval) has not found evidence to pursue that." Tim Hamilton, a petroleum consultant and head of the Automotive United Trades Organization in Olympia, Wash., said he would have been surprised if Sandoval's conclusions had been any different.

"As long as there are no meetings in smoke-filled back rooms -- that is, there is no collusion -- there is no evidence of gouging," Hamilton said. "There is no definition for gouging."

Hamilton, a longtime critic of "big oil," says laws allow oil companies to artificially raise the price of petroleum products as long as they do it as independent and competing companies and not as part of an organized plot.

"They (oil companies) fall through the cracks of anti-trust laws," he said. "In short they are morally gouging us, but not legally gouging us because they are free to charge what they wish.

"When these type of investigations occur in response to the public's claims of price gouging, they are doomed from the start. The finding always is that there is no gouging and, as a result, these type of investigations serve only as public relations for the oil companies."

Fred Gorell, spokesman for Chevron-Texaco, said today that in the last 10 years there have been 28 state and federal investigations into alleged price gouging by major oil companies in the last decade, and all of them have found no evidence to support the claims.

"The culprits have been the same three every time -- supply, demand and competition," Gorell said. "That is what controls prices at the pump. I am not surprised by his (Sandoval's ) findings nor that of the California Energy Commission that on Wednesday made the same conclusions."

Unleaded regular gasoline this morning averaged $2.01 at Nevada pumps, up from, $1.90 a month ago and $1.46 a year ago, AAA said. Nationwide, gasoline was selling today on average $1.65 per gallon, down from $1.68 a month ago yet up from $1.37 a year ago.

The companies questioned by Sandoval said there were a variety of reasons for the price hike, including a strike in Venezuela, cold weather on the East Coast that increased demand for heating oil, uncertainty about petroleum supplies due to the war in Iraq and Nevada's gasoline oxygenation requirement to counter pollution.

Sandoval said the inquiry will continue.

Sandoval said that while the attorney general's office cannot control all of the many factors that determine gas prices, it does have a duty to ensure that prices are reasonable and "free of illegal manipulation."

Only Hawaii and California have higher gas prices than Nevada. A lawsuit could be filed against the oil companies if there is any evidence of price gouging, a spokesman for Sandoval said. Sandoval said he intends to set up a meeting with Tim Muris, chairman of the Federal Trade Commission, to talk about ways Nevada can help the federal agency with its gas price monitoring project.

"If the only thing to come of this is that, by the application of pressure, we keep the industry honest, we've done our job well," Sandoval said.

"We're being asked by Nevada consumers to inquire, and we're doing that and everything else that we can to eliminate market manipulation because that's what they expect of us."

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