February 12, 2009
Thursday

Alaska Acting Attorney General Rick Svobodny released the results of a gasoline pricing investigation that has been underway since August of 2008. The report concludes that the higher prices Alaskans pay for gasoline is the result of unique market conditions in Alaska, which include few participants, small volumes, and limited threats of competition from outside sources.

The higher than normal gasoline prices experienced during the later half of 2008, when prices around the country dropped everywhere except Alaska, were largely the result of these market conditions coupled with unprecedented volatility in the crude oil prices. Oil rose to record high levels of $144 a barrel in July, 2008, and then dropped by over $100 a barrel to under $38 in just six months.

The Department of Law reviewed information from retailers, distributors and refiners and found no evidence that gasoline prices were the result of illegal activity, such as price fixing or collusion.

Alaska does not regulate gasoline pricing, and there is no price gouging law that limits the amount of profit a business can make. Like any other consumer good, the price for gasoline is set by supply and demand conditions in the marketplace.

In larger market areas like Seattle, where there is more competition for gasoline sales at the wholesale level, gasoline prices typically fall more quickly than in more concentrated markets. Following an unprecedented drop in crude oil prices, it was not surprising that Alaska's prices lagged behind prices in other areas of the Pacific Northwest. Over the last couple of months, the spread between Anchorage and Seattle prices has narrowed significantly. Prices in Juneau last week were below average street prices in Seattle.

Information available for Anchorage and Fairbanks indicates that retailers are not the cause of higher prices. Retail margins have stayed at or below margins typical of stations in the Lower 48. The attorney general's recommendation includes continued monitoring of gasoline prices.

The last investigation of gasoline pricing was completed in 2002 and spanned three years. The result of that investigation also found no evidence of illegal activity.

The state retained the services of Econ One, a Los Angeles-based economic consulting firm, to assist in the investigation and the preparation of the report.

On the Web:

Download the Gasoline Pricing Report
http://www.law.state.ak.us/pdf/press/2008GasolinePricingReport.pdf

Source of News:

Alaska Department of Law
www.law.state.ak.us

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