Editorial: Gasoline prices a mystery

Saturday, Nov. 12, 2005 | 10:01 a.m.

Politicians are frequently asked by voters to do something about sudden surges in gas prices, but despite years of appearing to act, they have yet to succeed in stopping them

Elected officials find themselves in a predicament whenever gasoline prices suddenly escalate and voters turn to them for answers. The problem is that whether they are members of Congress or members of local governing boards, most do not know anything more about gasoline pricing than do their constituents.

In the past they have verbally commiserated with angry consumers as one way of absorbing the complaints without sustaining political damage. Elected officials have also reacted by firing off letters to the oil companies, and sharing copies of the letters with the public. Additionally, state and federal officeholders have demanded that their respective legal departments launch investigations into the surging gas prices. These tactics have quieted the public but have never yielded much more than superficial insights into the pricing of gasoline.

The result is that after more than 30 years of periodic price spikes, each accompanied by public outcries and political grandstanding, no one still really has any genuine knowledge of whether sudden increases are driven by global market forces or greed on the part of oil company executives.

This was demonstrated during the recent spikes, which, for the first time, cracked the $3-a-gallon barrier. Prices rose dramatically after hurricanes Katrina and Rita, and rising along with them were the tempers of American motorists. With Republicans controlling both houses of Congress and the White House, a lot of wrath was vented their way. As uncomfortable as it made them feel, the congressional Republicans were forced by political pressures to join their Democratic counterparts and criticize the major oil companies, which are among their biggest contributors.

In commiserating with the public and directing the Federal Trade Commission to find out if the oil companies are gouging consumers, members of Congress were turning to their old playbook. But because the prices were so high this time, because oil company profits were so huge and because bonuses were so enormous for the companies' executives, they went a little further. Executives of five of the biggest oil companies were requested to appear before Senate committees, and they did so Wednesday.

In asking hardball questions and taking the side of consumers, the senators probably gained some political currency. But their gain in knowledge about the complexities of gasoline pricing was about zero. The oil executives may very well be telling the truth about their profits being a matter of scale -- huge companies rack up big numbers, but their profit margins are in line with other companies, they say. Or, they may be lying all the way to the bank.

All hope now rests with the Federal Trade Commission. Only if Congress perceives its assignment as urgent, and not as another political sop until the heat dies down, will the American public finally have a chance to learn if gas prices generate fair profits or unwarranted riches.