U.S. to Probe Recent Jump in Oil Prices

The Justice Department is looking into the recent surge in oil prices to determine whether price collusion took place, an Energy Department official said Tuesday.

Asst. Energy Secretary John Easton told a House subcommittee that the Justice Department has received numerous complaints about high price increases for heating oil and natural gas during December’s record cold weather. In some areas, retail prices rose by 50% or more.

The retail price jump coincided with a 60% jump in heating oil prices on futures markets, but prices have since fallen sharply and the wholesale market prices would not have immediately affected the price of oil held by wholesalers and retailers.

“The Justice Department currently is reviewing those complaints in its effort to determine whether a formal investigation is warranted into the question of whether collusion may have occurred here,” Easton said.

He said price increases would be unlawful under antitrust laws if they were made in collusion among competitors, but would be legal if they were taken individually.

Last month, New York Gov. Mario Cuomo called on the Justice Department to investigate the rise in heating oil prices. His office said retail prices had jumped as much as 50 cents to $1.50 a gallon.

The governors of five New England states have written to the Energy Department asking for an investigation.

Easton said record cold temperatures in most of the country during December increased demand for distillate oil by over 1 million barrels a day and there were problems in delivering more energy supplies to the affected areas.

“We can’t tolerate these kinds of price increases,” Rep. Edward Markey, (D-Mass.), told Easton.

“In response to this increased demand there is evidence that additional supplies of product are moving into the affected regions, not only making more product available, but also exerting downward pressure on the higher prices we saw at the end of December,” said Easton.