* Prices ease, but another refinery glitch threatens
* Congressman Waxman urges FTC to probe price rise
* State senate to hold hearing on refineries, gas prices
* FTC says it's "keenly aware" of price spike
SAN FRANCISCO, Oct 10 Record-high retail prices
for gasoline in California began to ease on Wednesday, receding
from an unprecedented jump to $5 a gallon in some areas, even as
further refinery disruptions threatened to slow the decline.
More politicians weighed in with calls for regulatory
scrutiny of the price spike, which began just over a week ago,
while a state senator announced a legislative committee hearing
on the matter to be held in San Francisco next month.
The average price of a gallon of regular gasoline in the
state dipped by a half cent to $4.666, according to the AAA Fuel
Gauge website, easing from Tuesday's record. Gas Buddy, a
filling station tracker that updates regularly, also showed
state prices down half a penny, at just below $4.65 per gallon.
While wholesale prices started falling last Friday, it took
some time for retail rates to follow. Prices are still up more
than 45 cents from a week ago, and the premium California's
motorists pay versus the U.S. average remains unusually wide at
about 86 cents.
In Los Angeles, where shortages had been so acute that a
handful of service stations stopped selling fuel, average prices
remained above $4.90 a gallon.
Prices surged more than 50 cents a gallon last week and
wholesale premiums rose nearly a dollar after various refinery
mishaps pinched supplies. Market sources said a possible "short
squeeze" that came about when one refiner was forced to buy fuel
on the spot market may also have been a factor.
The spike prompted Henry Waxman, ranking member of the House
of Representatives' Energy and Commerce Committee, to ask the
Federal Trade Commission to investigate the causes. In a letter
to FTC Chairman Jon Leibowitz on Tuesday, Waxman said the common
explanation was shortages resulting from refinery shutdowns.
"SOMETHING IS WRONG"
But Waxman said periods of tight gasoline supplies require
vigilance because of opportunities for market manipulation,
especially when only a few players hold most of the market
share. "When Los Angeles consumers see their gasoline prices
skyrocket by 50 cents per gallon over the course of one week,
something is wrong," Waxman said in the letter.
Senator Dianne Feinstein had also urged regulators to
FTC's Leibowitz said on Wednesday his agency was "keenly
aware" of record-high California gas prices.
"We are committed to ensuring competitive energy markets
through the enforcement of the antitrust laws," Leibowitz said
in a statement. "If we see a violation of the laws that we
enforce, we won't hesitate to act."
The FTC has previously investigated allegations such as the
coordination of output to push up prices in oil and gas markets.
It has nearly always found that price jumps were caused by
market factors such as closed pipelines, refinery outages or
other production problems.
The price jump, the biggest in any single state since 2005's
Hurricane Katrina, AAA said, unnerved drivers in the car-loving
state and led its two U.S. senators to call for federal probes
of possible manipulation in the gasoline trading markets.
Average Californian households burn about 100 gallons (378
liters) of gasoline a month at a cost of $466 at Wednesday's
prices, said AAA, an automobile club.
The price spike eased after California Governor Jerry Brown
on Sunday ordered that service stations be allowed to begin
stocking "winter-blend" fuel three weeks ahead of schedule.
Refiners responded by switching over this week. Kinder
Morgan said it would accept winter-blend gasoline for
shipment immediately on its 3,000-mile (4,828-km) Pacific
pipeline system, having originally scheduled that for Oct. 15.
Wholesale prices dropped by 60 cents a gallon on Monday, and
analysts said a sharp fall in retail prices would follow within
about a week, barring further market disruptions.
But on Tuesday, wholesale prices in Los Angeles jumped by 26
cents a gallon after Exxon Mobil Corp said it would move
ahead with planned work on its local refinery for the rest of
October. A power failure at that plant in Torrance had tightened
supplies and contributed to last week's price surge.
Meanwhile, Chevron Corp said a key unit at its
Richmond, California refinery, which suffered a major fire in
August, would remain shut through the end of the year - the long
end of estimates by industry sources.
In response, state senator Mark Leno said on Wednesday the
Senate Select Committee on Bay Area Transportation would hold a
hearing on state refineries and gasoline prices next month.
Leno said the Richmond closure could create problems for the
state beyond the pump. "Economists have estimated that a lengthy
shutdown of that facility could slow the growth rate of the
state's economy by half a percentage point," he said.
The supply squeeze also led to a renewed call to block the
proposed acquisition of a BP Plc refinery in southern
California by Tesoro Corp, unveiled in August.
"If the purchase goes through, Tesoro and Chevron will
between them own nearly half of California's fuel refining
capacity, including the three largest refineries in the state,"
wrote Liza Tucker, of Santa Monica, California-based Consumer
Watchdog, in an Oct. 10 letter to the state attorney general.