Dissenting Statement of Commissioner Jon Leibowitz …

                   Dissenting Statement of Commissioner Jon Leibowitz
   Regarding the Federal Trade Commission and Department of Justice Antitrust Division
           Report on Spring/Summer 2006 Nationwide Gasoline Price Increases

        The oil industry, which posted record profits in 2006,1 should not view this Report as in
any way a vindication of its behavior. Commission staff identified some plausible justifications
for the unexpected and dramatic price spikes that bedeviled consumers in the Spring and
Summer of 2006, and that raised the average price of gasoline to more than $3.00 per gallon in
August of that year. The fact remains, though, that most of what we did here was develop a
theoretical model for why gasoline prices likely increased. This is not an unreasonable
approach, given that just last year we completed an exhaustive investigation into gasoline pricing
in the aftermath of hurricanes Katrina and Rita.2 That investigation found price gouging by
refiners under the Congressionally mandated definition and, beyond that, disturbing conduct by
even more petroleum companies. But the question you ask determines the answer you get:
whatever theoretical justifications exist don't exclude the real world threat that there was
profiteering at the expense of consumers.




       1
               See, e.g., Chevron, Inc., 2006 Annual Report 2 (2007) ("We reported record net
income of $17.1 billion..." in 2006); BP, Inc., Annual Review 2006 5 (2007) ("In terms of
financial performance, the year was a record one..."); see also CNN.com, Exxon Posts Biggest
Annual Profit Ever (February 1, 2007) available at
http://money.cnn.com/2007/02/01/news/companies/exxon/index.htm (Exxon "reported the
biggest annual profit on record for a U.S. corporation - earning more than $75,000 every minute
of 2006 on the back of record oil prices.").
       2
                Moreover, a recent court's misuse of our 2006 Katrina Report to bolster its
decision to approve a merger that the Commission unanimously believed to be anticompetitive
raises the question of whether Congress (or the President) will want to ask us to do these reports
in the future. See F.T.C. v. Foster, No. 07-352, slip op. at 49, 2007 WL 1793441, 2007-1 Trade
Cases P 75,725 (D.N.M. May 29, 2007) (approving the acquisition of Giant Industries, Inc. by
Western Refining, Inc.) ("In 2006, the FTC represented to Congress that the bulk petroleum
supply markets within the United States were operating in a competitive manner.... To support its
investigation, the FTC analyzed a large volume of wholesale and retail pricing data, including
data on gasoline prices in the Albuquerque area."). Nobody wants to see one of our principal
enforcement priorities ­ that is, blocking petroleum company mergers that reduce competition
and harm American consumers ­ undermined by such judicial misunderstandings.