Our view: Market driving gas prices


Rarely does a month go by that someone doesn't contact the Craig Daily Press to complain about local gasoline prices.

Usually the complaints are followed with a request to do an investigative report about whether there's some kind of "gas cartel" that fixes prices.

We don't like paying high prices for gas any more than the next guy, but we know from experience that it's difficult to understand the market forces that drive gasoline prices.

Gas prices are complicated. Some states have "price gouging" laws that prevent businesses from charging more than certain legislatively determined amounts for various products. Colorado does not have any type of price gouging law, and gas-station owners are free to set prices at whatever level they like or whatever level the market will bear.

From a consumer standpoint, we don't have much choice. No law on the books limits what gas stations or oil companies can make off the sale of gasoline. We can either pay what the gas stations want or go without. But many people are left wondering what is so unique about Craig, that makes it more expensive to buy gas here than almost anywhere in the state.

The Antitrust Unit of the Colorado Attorney General's Office spent a lot of time looking at gas prices in Grand Junction during the course of a price-fixing investigation back in 2000. There is a report on the attorney general's Web site, http://www.ago.state.co.us/Gasoline/gaspricefix.stm, that shows how difficult it is to uncover wrongdoing. Despite spending a year interviewing hundreds of people, the A.G.'s Office said it was "without sufficient evidence to proceed further" with allegations of price-fixing.

In investigating the Grand Junction situation, the Attorney General's Office touched on what can happen in a small market with little competition.

"Uniformity of prices, especially with a fungible commodity such as gasoline, does not on its own prove the existence of a price fixing conspiracy. Price-fixing only occurs when there is an express or tacit agreement among competitors to fix or stabilize the prices they will charge for their product or services. Proof of such an agreement generally requires substantive inside information or testimony from participants in the conspiracy, although significant circumstantial evidence may suffice if it can be independently corroborated.

"In investigating any allegation of price fixing, it is important to understand the particular marketplace in which the conspiracy is alleged to have occurred. This is because the absence of competition in a real sense may exist in certain markets without any illegal agreements between competitors. This is especially true in markets with few competitors and significant barriers to the introduction of new competition. Known as 'oligopolies,' such markets are generally characterized by static and even above-average prices."

Could that be the situation in Craig? Even without a secret agreement, there are few enough gas stations that gas prices are likely to settle within a cent or two of each other.

For those who aren't satisfied with the idea that we are simply the victims of free market forces in Craig, the Attorney General's Office says it's committed to investigate substantial allegations of gasoline price fixing and to vigorously enforce the antitrust laws.

Before any action can be taken on a consumer complaint, the Attorney General's Office must receive a complaint in writing.

To receive the complaint form, call the Colorado Consumer Line at 1-800-222-4444 or download the complaint form at http://www.ago.state.co.us/Gasoline/gaspricefix.stm.

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