Last Summer’s Gas Price Spike: FTC Says Big Oil did not Conspire

One of the things that I wondered during the summer of 2006 as a gas price spike pushed prices higher was whether Big Oil was engaging in a little gouging. Apparently plenty of other people, including some in the government, wondered whether Exxon (XOM), Chevron (CVX), Conoco-Philips (COP) and other Big Oil players had conspired to drive up the cost of gasoline. After all, 2006 was a record year for the oil and gasoline industry.
But the FTC says that Big Oil is clean. A "confluence of factors," including high demand, continued aftermath of hurricanes Katrina and Rita, normal refinery shutdowns and even ethanol additives, were the real villains behind last summer's gas price spike. But it's interesting to note that the FTC did not stand united. Reuters reports that one bigwig dissented from the official FTC view of Big Oil:

FTC Commissioner Jon Leibowitz dissented from the report's conclusions and issued a separate statement that said the agency developed a "theoretical model" for why gasoline prices likely increased.

Leibowitz said he believes "there was profiteering (by oil companies) at the expense of consumers."

In the meantime, of course, Big Oil continues its recovery on the stock market. However they got the record profits last summer, Big Oil still retains plenty of cash to maintain its place at the head of the stock market rally.

Disclosure: I do not own any of the stocks listed above. I do, however, believe that some profiteering took place. While other factors may have affected the situation, and probably did, It is my opinion that Big Oil took advantage of the chance to exaggerate the effects of legitimate market factors.

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