In California "supply is manipulated in a way that produces the highest possible prices"
Californians paid $ 1.3 bn more for gasoline last year than they would have if they lived in states where there's a
competitive market for oil, but oil companies are playing within the law in their pricing, state Attorney General
Bill Lockyer said. Instead, the inflated prices that forced residents in some spots to pay upwards of $ 2 a gallon in
April when Lockyer started his probe are the result of inadequate competition, California's stiff clean air laws and
the state's slightly higher gasoline taxes.
"We don't have any evidence that they've done anything criminal or violated anything civil," Lockyer said. But, he
said, "the supply is manipulated in a way that produces the highest possible prices, and that is business, that is
the American way.
Californians typically spend more at the pump than motorists everywhere but water-locked Hawaii and Nevada, which
gets most of its gasoline from California. Motorists in California paid an average of $ 1.32 per gallon in 1999
between January and August, compared to a high of $ 1.54 in Hawaii and a low of 89 a gallon cents in Georgia, the
report found.
Proposed mergers between BP Amoco and Atlantic Richfield Co., and Mobil and Exxon, could further stifle competition,
especially since 90 % of California's refining capacity and gasoline sold is controlled by six oil companies --
Chevron, Tosco, Equilon Enterprises, Arco, Mobil and Exxon, Lockyer said. Both consumer advocates and oil companies
called the report a victory.
"The preliminary report's findings confirm what we've been telling the California Legislature for years," declared
Dennis DeCota, executive director of the California Service Station and Automotive Repair Association. Chevron
spokesman Fred Gorell said the company was pleased Lockyer had found no evidence of wrongdoing. "We believe that
other ongoing governmental investigations will come to the same conclusions," he said.
Prices have dropped in California since Lockyer opened the investigation in April, and in some places gas costs less
than $ 1.50 a gallon. Drivers in the San Francisco Bay area continue to pay about 22 cents a gallon more than those
in the Los Angeles area -- a puzzling trend, Lockyer said, since much of the gasoline in California is distributed
from area refineries. Nationally, the average price of a gallon of gas is $ 1.3287, according to a Lundberg Survey, a
review of pump prices at 10,000 gas stations nation-wide.