The New York investigation is extensive, looking at the entire state supply chain, from production to pump, according to CNN. The research will focus not only on large oil companies that supply oil to the state but also on refineries that convert crude oil to petrol as well as independent pipeline and terminal operators, the source said. The New York Statute on Price Rises gives authorities broad powers to investigate entire supply chains, covering all actors, including manufacturers, retailers, distributors and shipping companies. According to the attorney general’s website, state law prohibits “unconsciously excessive” prices, including both “unconsciously extreme” prices and prices set by “unfair leverage or unconscious means.” It is not clear what evidence, if any, the state authorities have of a possible price spike. “Rising gas prices are forcing working New Yorkers and low-income families to make difficult decisions about whether to pay bills or put food on the table,” James told CNN. “The price increase is unfair and illegal and my office is determined to ensure that it does not happen in our state.”
Rockets and wings
Pump prices are taking their toll on the oil market. Oil prices have risen over the past two years for a number of reasons, including strong demand as Covid declines and a slow return to US and OPEC supply that was shut down at the start of the pandemic. The war in Ukraine sent oil prices soaring last month to their highest level since 2008, pushing gas prices to record lows. The New York inquiry comes just weeks after President Joe Biden called for a faster drop in gas prices as oil fell from its highs after the invasion. Biden pointed to the tendency for gas prices to rise like a rocket when oil is launched, but to fall like a wing only when crude is crushed. The White House has drawn attention to a decades-old trend known as rockets and wings, which critics say harms consumers by failing to pass on savings to drivers. The focus of the research, at this stage, is to understand pricing further in the supply chain and not necessarily at the retail level, the person familiar with the matter told CNN. Tom Kloza, head of global energy analysis at the Oil Price Information Service, looked at pricing data from more than 5,000 gas stations in New York and said the data so far this year “does not show anything unusual.” “There are always some bad seeds that have high prices in small communities where convenience is everything,” Kloza said in an email. “Therefore, AG can find a few stations, but the vast number of pilots is unlikely to fall under any loose definition of ‘gouging’ chosen by politicians.” Kloza added, “For me, gouging is out of control at Yankee Stadium. How much do they spend on a hot dog and a bottle of water?”
NY AG asked the public for receipts and photos
After Biden banned imports of Russian oil from the United States last month, the New York attorney general warned oil companies and gas stations that price increases were illegal. In a statement at the time, James urged people facing rising fuel prices to contact her office to indicate dates and times of price increases and to provide copies of sales receipts as well as photographs of advertised prices. James promised to do “everything we can to protect consumers.” The American Petroleum Institute, the trade group representing the oil and gas industry, told CNN that pump prices were a function of rising demand, late supply, “geopolitical turmoil” and political uncertainty. “It’s an industry that gets prices, not price makers, and countless surveys throughout history have shown that changes in gasoline prices are based on market factors,” said API spokeswoman Bethany Williams. However, the industry has defended itself in the past against allegations that it would seek to capitalize on Russia’s invasion of Ukraine. After Biden warned the oil industry in late February not to “take advantage of the moment,” API CEO Mike Somers told CNN, “Our companies will never benefit from this kind of situation.”
“Removal of the American people”
Critics of the oil industry often note the huge profits companies make and the huge sums of money available to shareholders in the form of dividends and acquisitions. “During this Russian war, you are exterminating the American people and it must end,” California Raul Ruiz, a Democratic lawmaker, told Big Oil executives during a hearing last week. However, it is worth noting that oil companies lost huge sums of money in 2020 when crude oil fell below zero for the first time. Dozens of oil companies went bankrupt during the recession. However, officials in some states have recently called for an investigation into possible price increases. In early March, Massachusetts Commonwealth Secretary Bill Galvin called for an inquiry into whether oil and gas companies are raising prices. “They have a right to profit. They do not have a right to a huge profit,” Galvin told WBZ-TV at the time.
