Published Saturday, April 1, 2000

No quick relief for gas price Attorney general says the real problem is lack of competition among oil companies in California By Tom Verdin ASSOCIATED PRESS

LOS ANGELES -- Attorney General Bill Lockyer said Friday there is nothing he can do to bring down the price of gas right now.

"No, I'm not king," he said before his task force on gas pricing held its last meeting.

He could file a lawsuit against producers, he said, but that is not a short-term solution.

"If someone walked in with a videotape of a secret meeting to set prices or a whistle-blower showed up to admit that they had done that privately, I'd go after them criminally. But that hasn't happened, and I don't expect that to occur," he said. "What we need to do is figure out how to not have this happen year after year after year."

In mid-March, the state's retail gas prices averaged $1.74, or 19 cents above the national average, according to a task force status report released March 16.

Prices in San Francisco were 24 cents higher than the national average, while prices in Los Angeles were 7 cents higher.

Californians paid an extra $1.3 billion for gas from January to August 1999, according to an attorney general's report in November.

Lockyer said state taxes and requirements for cleaner-burning fuel play only a small role in the state's gas prices. The real problem, he said, is too little competition that allows producers to jack up the prices.

Lockyer said the five major oil companies operating in the state act like a cartel because they control more than 90 percent of the market.

At the final meeting of his task force Friday, the panel heard economist reports disputing Lockyer's contention.

One report found that the state's gasoline market is acting like any commodity market in which prices rise when supplies are low. Gasoline prices in California and around the nation have risen to record levels during the last several weeks, which analysts have blamed on higher oil prices and extremely low gasoline inventories.

But Lockyer said, "The principal reason is refinery profit-taking."

The historic trend of refinery margins is 25 cents a gallon, he said. Last year it was 40 cents, and so far this year it's 66 cents a gallon. "That has nothing to do with the world price of oil. That's their costs of operating and their profit-taking."

Legislation is possible, Lockyer has said. Republicans are calling for immediate tax cuts, while Democrats focus on oil company profiteering.

Nearly 200 people and a convoy of minivans, pickups and a few big rigs gathered in the Capitol on Thursday to protest legislative inaction over the issue.

Republican Assemblyman Tony Strickland's bill, AB 1706, is scheduled to come before the Revenue and Taxation Committee on Monday.

There's not much else you can do to increase competition, Lockyer said Friday: "It's very hard for a state government to affect international markets of this sort."

The task force, representing the oil industry, service stations, truckers and consumer and environmental groups, started meeting in January. It will issue a report next month that will be submitted to the state Legislature.

Scripps-McClatchy News Service and Los Angeles Times contributed to this story.

http://www.hotcoco.com/news/california/stories/gascost_20000401.htm

-- Martin Thompson (mthom1927@aol.com), April 02, 2000