WASHINGTON – Senator Carl Levin (D-Mich.) announced today that the results of an 11 month investigation into gas prices by the Majority Staff of the Permanent Subcommittee on Investigations (PSI), which Levin chairs, will be released on Monday, April 29th, at 10:00 A.M. Copies of the 400 page report, Gas Prices: How Are They Really Set? will be available in SR-199. The report will also be available online at http://www.senate.gov/~gov_affairs/psi.htm.

The majority staff report will be the subject of two days of hearings in PSI on Tuesday, April 30th in SH-216, and Thursday, May 2nd at 9:30 a.m. in SD-342. Top executives from five of the largest oil companies will be testifying at the Tuesday hearing; several State Attorneys General and oil industry experts will be testifying at the Thursday hearing. (See below for complete witness list.)

"This report confirms what a lot of us have been saying for some time -- that when it comes to gasoline, there is too little competition and too much concentration in many markets in the United States," Levin said. "And the report goes beyond that. It documents the actions by major oil companies to keep supplies tight and inventories low in order to increase prices and maximize profits."

"The effect on the economy is significant," Levin added, "because the cost of gasoline is factored into the price of most goods and services as a result of transportation costs."

In June 2001, following the second consecutive spring price spike in the Midwest, Levin directed the Majority Staff of the PSI subcommittee to investigate the reasons for these increases in the price of gasoline, and in particular, whether the increased concentration within the refining industry has contributed to these price spikes and increases.

The staff's investigation encompassed issues concerning the structure of the domestic refining and marketing industry and the conduct of the participants in these markets. The staff interviewed representatives from a variety of segments of the industry, including major refining and marketing companies, distributors of refined gasoline, service station owners and dealers, trade association representatives, lawyers and economists.

The staff reviewed several recent investigations and studies of gasoline pricing, including the Federal Trade Commission's (FTC) Report on the Midwestern gasoline price spike in the spring of 2000, and were briefed by the FTC staff on the results of their three-year investigation into West Coast prices. The staff met with officials from the Department of Energy's Energy Information Administration (EIA), reviewed their findings and conclusions regarding recent price spikes and trends in gasoline prices, and analyzed pricing and supply data provided by the EIA.

The staff also examined industry documents produced in several antitrust and gasoline pricing lawsuits and in several FTC proceedings. Because a number of these documents were originally produced in legal proceedings and not publicly available, the subcommittee issued subpoenas for many of these documents.

The staff purchased wholesale (rack) price and retail price data from the Oil Price Information Service (OPIS). The information contained daily gasoline price data, by brand, for all of 2000 as well as the first eight months of 2001 from five states: California, Illinois, Maine, Michigan and Ohio. The staff analyzed, by brand, statewide average rack prices, statewide average retail prices, daily price changes, and the rack-to-retail margins.

As part of this investigation the subcommittee issued subpoenas to a number of major oil companies for relevant refining and marketing documents from 1998 through 2001. In response, the subcommittee received approximately 103 boxes of documents containing approximately 265,000 pages. The staff reviewed these documents from January 2002 until March of 2002.

The report discusses the Majority Staff's findings regarding the causes of recent price spikes and the effect of concentration in the gasoline refining and marketing industry on gasoline prices. It provides a factual background on how gasoline is produced and marketed; and it describes the operation of the wholesale and retail markets for gasoline and how retail prices are set.

For witness list please visit http://www.senate.gov/~gov_affairs/043002witness.htm