Petroleum markets, unduly pump prices

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Gas prices remain high in Washington despite oil prices decreasing.

Although the world market was strained by Russia’s attack on Ukraine, post-pandemic demand increases, and a weakened supply chain and production system, Sen. Maria Cantwell said there needs to be a greater focus on the “mysterious middle” of the gas market.

Cantwell, who is the chair of the Committee on Commerce, Science and Transportation, wants to address high gas prices by monitoring suspicious trading practices. She asserted that there is lack of oversight in petroleum trades that are unjustifiably swelling fuel prices in Washington, Oregon and California.

Prices continue to remain high in Clark County, with the average creeping to $4.20. Washington’s average costs are $4.70.

“Americans have the right to know why one of our most important commodities doesn’t have the right amount of proper transparency and oversight,” Cantwell said during a committee hearing Tuesday. “It doesn’t seem right to me that we should have more transparency on a product like wheat or corn than we would on oil.”

To fix the problem, she continued, the Federal Trade Commission needs to have the tools to increase transparency with the petroleum industry.

“This is something that we would like to see — the FTC (to) be the watchdog on this issue and be more aggressive in protecting consumers,” Cantwell said.

Robert McCullough, principal of the McCullough Partners energy consulting firm and a hearing witness, said the Federal Trade Commission doesn’t receive data from the Oil Price Information Service, a major price reporting agency for the West Coast. What is known, however, is that there are anomalies between refinery prices to middlemen, such as gas stations or producers, that aren’t congruent with supply and demand.

“(…) there is an opaqueness to the market that we don’t understand what those trades are,” McCullough said. “No one is looking at those trades.”

McCullough, who contributed to uncovering trade anomalies at Enron, emphasized that the federal commission can’t look at the Oil Price Information Service’s data unless they begin an investigation or bear subpoenas. Moving forward, there needs to be ongoing and open communication so the agency knows where to look, he added.

Kathleen Sgamma, president of Western Energy Alliance, presented a different perspective during the hearing. She said surging prices reflected the White House Administration’s lack of policy enforcement as it relates to leases and permits for petroleum industries.

She added that the administration should halt a proposed rule in the Securities and Exchange Commission to change policies that are intended to address climate change. Specifically, the measure would require public companies to disclose information to investors and regulators about their greenhouse emissions, as well as how climate change is affecting them.