Federal Trade Commission Chair Lina Khan this week said she is directing staff to examine retail fuel station deals as well as investigate possible collusion by national convenience store chains to push up prices.
According to the U.S. Department of Labor, overall energy prices are up 24% in the past year while pump prices have climbed 42%. Gas prices began the year at $2.24 per gallon and are now averaging $3.15.
That jump also may be due to increased demand in an economy rebounding from the pandemic. Other reasons behind increased fuel pump prices could be refinery closures, higher labor costs and shortages of drivers.
Khan made her comments in a letter to the White House, also citing what she called the FTC’s lax approach to fuel station mergers in recent years that resulted in heavy consolidation, resulting in “conditions ripe for price coordination and other collusive practices.”
FTC Chair Lina Khan
Khan said that the FTC will determine whether there exists a power imbalance that favors large national chains, allowing them to force franchisees to raise their fuel prices – “benefitting the chain at the expense of the franchisee’s convenience store operations.”
In June, the FTC approved the sale of Marathon Petroleum Corp.’s Speedway c-store chain to 7-Eleven. But the companies closed the deal before it received the FTC’s blessing. Approval only came after both companies agreed to sell hundreds of locations deemed in competition with each other.
The new scrutiny could affect HollyFrontier Corp.’s agreement announced this week to buy Sinclair Oil Corp., a deal which includes refineries, a renewable diesel facility, a 300-distributor network and 1,500 convenience store locations.
Khan’s comments came shortly after Hurricane Ida made landfall in Louisiana after moving through the Gulf of Mexico, home to 48% of U.S. refining capacity and 16% of crude oil production. Ida disrupted about 12% of the nation’s total daily refining capacity.
Some industry analysts are skeptical of the FTC’s and Khan’s motivations, believing the crackdown is as much about politics as anything else, as the price hikes have come since the beginning of the Biden administration in January.
“I wouldn’t want to say this was about PR, but I don’t think the investigations are going to reveal much,” Tom Kloza, head of energy analysis at the Oil Price Information Service, told Washington-based The Hill, which covers Congress and politics.
