Politics & Economics: Gas-Price Gouging Said to Be Scant After Katrina Hit
WASHINGTON -- Rising gasoline prices in the wake of Hurricane Katrina generally were the result of the forces of supply and demand, a Federal Trade Commission study found. But the agency identified scattered instances of price gouging, a finding likely to inflame congressional debate over pending federal legislation.</br></br>The FTC study, ordered by Congress last year, is expected to be a major focus of a Senate hearing today.</br></br>Overall, the FTC report offered support for the petroleum industry, which has been dogged by price-gouging accusations after Katrina idled 27% of U.S. crude-oil production and 13% of the nation's refining capacity. The average price of gas in six representative cities spiked 50 cents after the storm hit land on Aug. 29, declined 35 cents over two weeks and then jumped by additional 25 cents after Hurricane Rita hit in late September, the FTC report said.</br></br>"In light of the amount of crude-oil production and refining capacity knocked out by Katrina and Rita, the sizes of the post- hurricane price increases were approximately what would be predicted by the standard supply-and-demand paradigm," the report said.</br></br>The report found that several refiners saw their profit margins rise after the hurricanes in ways that weren't attributable to increased costs, and 15 separate instances of gouging by refiners, dealers and stations were cited. The FTC said these increases mirrored local trends in all but one case when geography and other factors were considered.