The West Coast’s U.S. Senators today asked the Justice Department to do a refinery-by-refinery investigation into why gas prices spiked to more than $4 a gallon during May and October.
The letter to U.S. Attorney General Eric Holder from senators Dianne Feinstein, D-Calif.; Barbara Boxer, D-Calif.; Ron Wyden, D-Ore.; Jeff Merkley, D-Ore.; Maria Cantwell, D-Wash.; and Patty Murray, D-Wash., asks that the Oil and Gas Price Fraud Working Group probe any possible market manipulation or false reporting.
“A McCullough Research report released Nov. 15th in conjunction with a California State Senate hearing on California gas prices revealed information that showed that the price spikes in May and October occurred while crude oil prices were declining, inventories were increasing, and possibly in conjunction with misleading market-making information,” they wrote.
The report they cited found that some West Coast oil refineries may have been producing oil last May despite public reports that they were shuttered for maintenance. For example, McCullough’s analysis found that the Chevron refinery in Richmond emitted byproducts of petroleum production throughout May – yet public reports claim the refinery shut down production from May 12 to May 26.
The report found the October price spike added up to a 66 cent-per-gallon windfall profit for oil companies—or about $25 million a day. The difference between what drivers actually paid and what they should have paid exceeded $1 billion.
“West Coast families and businesses are reeling from elevated and extremely volatile prices at the pump, impacting family budgets, inflation levels, and overall economic activity,” the senators wrote. “We believe this situation demands the attention from the Working Group established in April 2011 specifically to ‘monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm.’ ”
The working group includes representatives from the Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy.
Feinstein in August had urged the Federal Trade Commission to launch an investigation of the sudden rise in case prices.
Read the full text of the senators’ letter, after the jump: