Boxer Questions Wholesale Gas Pricing

Sen. Barbara Boxer (D-Calif.) asked Federal Trade Commission Chairman Robert Pitofsky to widen the agency’s continuing investigation into gasoline pricing practices in California to include wholesale prices for unbranded gasoline. Boxer noted that the wholesale price of unbranded gasoline, which is sold by a dwindling number of independent service stations, currently is a few cents higher per gallon than the wholesale price of the branded gasoline sold by the major chains. Boxer said she believes the relatively unusual “price inversion” is evidence of predatory pricing by big oil companies. “If you found out that Kmart was charging more than Saks Fifth Avenue for the same product, you would think that was odd, and that’s what we think is happening in the gasoline market,” Boxer said. Chevron Corp. spokesman Mike Libbey called the price inversion “a temporary situation” that reflects the tight supply of gasoline in the market. Unbranded retailers buy surplus supplies, which in good times are sold at a discount. But when supplies are short, as they are now in California, there is little or no surplus and prices are higher, he said.