Brain Top Off!

Gasoline prices are almost at $4 per gallon. This is the second time in three years that this particular mark has been reached. There are 2 different federal agencies that could have some stake in investigating possible manipulations of the industry. These two agencies have agreed to cooperate in these investigations. The effects of this increased enforcement, however, could possibly be difficult to discern. Article source – Federal agencies agree to cooperate on gas price investigation by MoneyBlogNewz.

Comments on the Federal Trade Commission on gas

In late 2008, gasoline prices easily rose up and above $4 per gallon. It is not allowed for there to be “fraud or deceit in wholesale petroleum markets, and omissions of material information that are likely to distort petroleum markets.” This is due to the “Final Rule” the Federal Trade Commission signed about a year later. The cost of fuel increases have been investigated by the Federal Trade Commission since this rule was put into place. There have not been any official fines or charges to the Federal Trade Commission even though there were investigations.

Agreement with FTC and CFTC

There is the Commodity Futures Trading Commission, or CFTC. This agency is smaller than the Federal Trade Commission as an agency. There are goods called commodities and futures. These are investments done not in corporations however in physical products. The 2 agencies will share information about the fuel industry not available to the public with the “Memorandum of Understanding” that the CFTC and FTC signed. In order to help stop abuses in the industry, the information is being shared between the companies.

The way fuel costs are determined

Gasoline and fuel prices, like all product prices, are impacted by a variety of factors. Consumers start to feel the pinch of a jump in oil costs. It generally takes a few months before the industry feels this though. Conflicts may change the fuel price. Also, the demand and cost of refining make a difference. Customer sentiment also has a strong impact, and nervousness about fuel costs could be a self-feeding loop that increases prices. There are often accusations of oil companies gouging on fuel costs, though the FTC and CFTC rarely find enough evidence to prosecute perceived offenders.

Articles cited

The Price of Fuel

thepriceoffuel.com/whataffectsfuelpricing/

FTC

ftc.gov/opa/2009/08/mmr.shtm

CFTC

cftc.gov/

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