Proposed Oil Company Merger, Gas Prices

“Merger Is a Bad Deal for California Motorists” (Commentary, Aug. 25) has a lot to say about gasoline markets, but no credibility if you look at the facts. The author’s claim that the California gasoline market is dominated by a few companies is wrong. In fact, anyone can bring gasoline to market in this state, as many companies based outside California continue to do. Imports come to California from Scandinavia, the Far East, South America and other parts of the world.

In a 1996 study of the California gasoline market, professor John Umbeck of Purdue University stated, “There is no evidence of any conspiracy among major oil companies in California. As of December 1996, L.A. prices were lower than they ever have been since deregulation 16 years ago. If there was a conspiracy, it was a miserable failure, as gasoline prices have not even kept up with inflation. If oil companies had conspired to raise prices each year by the annual rate of inflation, they would be charging wholesale prices in 1996 equal to $2 per gallon.”

Consumer gasoline prices today reflect the higher wholesale prices that occurred in July and the fact that demand for gasoline in the U.S. is unusually strong this summer driving season. Gasoline prices at the pump were down slightly this summer through July, according to the Energy Information Administration, and actually were lower than prices a year ago.

DOUGLAS F. HENDERSON

Exec. Dir., Western States

Petroleum Assn., Glendale

* * What’s going on with gasoline prices? Less than a month ago the price for gasoline at my local station was $1.12 9/10 per gallon. It had been going down steadily. This morning, after the latest hike (there have been at least seven), the price for a gallon of gas is now $1.35 9/10--that’s 23 cents a gallon, almost a 20% increase in less than a month. Funny thing is the price of crude oil is off nearly $6 a barrel since January. The decline has been fairly steady since January, with a slight increase in May of less than a dollar, and a smaller increase in July of about 60 cents. Tell me, if you can, that this isn’t consumer gouging.

The American people could bring the price of gasoline down in a matter of days. The solution is simple. Boycott one company. It doesn’t matter which one. What we need is a champion. We need a consumer advocate to take up the banner. Do we hear an answer to our call?

ROGER A. SMITH

Altadena