FreedomTalks

The Federal Trade Commission released a damning study that should should end the pro-government pro-regulation hustling proceeding in the current price gouging “debate” concerning oil prices. Don’t expect actual facts to make any impact though.

The evidence also showed that companies operated their refineries – and determined the product quantities they would produce – with the goal of maximizing their profits, taking market prices as a given factor. Our investigation uncovered no evidence indicating that refiners make product output decisions to affect the market price of gasoline. Instead, the evidence indicated that refiners responded to market prices by trying to produce as much higher-valued products as possible, taking into account crude oil costs and other physical characteristics. The evidence collected in this investigation indicated that firms behaved competitively. (p. vi)

So why are prices going up?

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 that presumes a market is performing competitively. The regions of the country that experienced the largest price increases were those that normally receive supply from areas affected by the hurricanes. (page viii)

The FTC’s conclusion?

Evidence gathered during our investigation indicated that the conduct of firms in response to the supply shocks caused by the hurricanes was consistent with competition. (p. ix)

Of course, this is what Dick Armey and FreedomWorks have been saying all along. Don’t expect Bill O’Reilly, the alarmist Democrats, or the nightly news to report to Americans these important findings tonight, however. Rather, expect the talking-heads to impute nefarious motives on evil “big oil” companies, so they can backdoor a new slew of energy regulations that would only drive prices up and supply down. Max has more on this here.

This entry was posted on Monday, May 22nd, 2006 at 1:52 pm and is filed under Trade. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.