Gas price increase explained by Senator Dianne Feinstein
California's senior senator Monday charged that
California's record gasoline prices may be the “results of an illegal short
squeeze” engineered by the handful of companies that refine gas here.
In a letter to the Federal Trade Commission, Sen. Dianne Feinstein,
cited news reports that said Tesoro Corporation — whose refinery near San
Pedro went down for maintenance — was taken advantage of by other gas
suppliers “either through collusion or the use of market power.”
“Publicly-available data appears to confirm that market fundamnetals
are not to blame for rising gas prices in California,” the California democrat
wrote in a letter to FTC chairman Jon Leibowitz.
Feinstein also called on the FTC to monitor energy price and production
data gathered by other government agencies, to watch for “fraud, manipulation
or other malicious trading practices.”
She also urged the FTC to establish a permanent gas and oil oversight
market committee, similar to the Federal Energy Regulatory Commission's
oversight of the natural gas and electricity markets.
Feinstein said “California consumers are all-too-familiar with energy
price spikes which cannot be explained by market fundamentals, and which turn
out years later to have been the result of malicious and manipulative trading
She reminded the FTC of past frauds, like the 2000-2001 electrical
crisis, which turned out to have been caused by market manipulation by Enron
and other traders. That fraud cost the state an estimated $40 billion, caused
rolling blackouts, and is cited by some historians as having cost Gov. Gray
Davis his political career.