Gasoline prices in Arizona being probed

By Howard Fischer
CAPITOL MEDIA SERVICES

PHOENIX - Attorney General Terry Goddard launched an investigation Wednesday into the state's high gasoline prices.
 
Goddard will be issuing "civil investigative demands" - essentially subpoenas - to selected retailers, wholesalers and others who have information about how prices are set from the refinery to the pump. He specifically wants to see what each was charging the day before Hurricane Katrina hit and now.  
 
Goddard said the sharp run-up in prices after the hurricane did not surprise him. But he called it "suspicious" that gas prices in California are lower than in Arizona - especially since much of this state's gasoline supply comes from the West Coast.
 
In fact, he said, Arizona prices normally run 20 cents a gallon less than those in California. Yet this week, Arizona fuel is running in the $3.10-a-gallon range, about 4 cents higher than California's.
 
He said just the reverse should be true, especially as gas taxes are higher in California, and the special fuel blend required for motorists there is more costly than the one mandated for summer use in Maricopa County.
 
"It just doesn't make sense to me," he said.
 
Goddard acknowledged he can take legal action only if he finds collusion, price-fixing or other anti-competitive practices. He said he is powerless to act if it turns out that prices are higher in Arizona solely because refiners, wholesalers and retailers have figured out that Arizonans are willing to pay that much.
 
Anita Mangels, a consultant for the Western States Petroleum Association, said the 30-plus oil companies that are members will cooperate.
 
Mangels said she is "confident" the inquiry will show today's prices are a function of legitimate market conditions, including demand, and not the result of illegal activities.
 
Goddard's inquiry comes as two proposals were unveiled to cut gasoline taxes, at least temporarily.
 
Sen. Thayer Verschoor, R-Gilbert, wants to suspend the state's 18-cent-a-gallon gasoline tax for up to 45 days to help motorists cope with the high cost of fuel. Verschoor said Arizonans could save about $2 million a day.
 
And U.S. Rep. John Shadegg, R-Ariz., has introduced legislation to suspend the federal 18.4-cent-a-gallon gas tax for 30 days. He hopes to have hearings on the bill within a week.
 
Not everyone believes the moves are good ideas.
 
"It appears to me this is, to some degree, starting to smell like posturing," said state Sen. Carolyn Allen, R-Scottsdale, a member of the Transportation Committee. "For the average motoring public out there, I don't know this is going to be a windfall for them."
 
The numbers appear to bear that out.
 
Someone who drives 18,000 miles a year in a vehicle that gets 20 miles to the gallon would buy 75 gallons of gasoline a month. At $3 a gallon, that works out to $225.
 
Suspending the state gas tax for a month would save that motorist $13.50; the federal savings, if Shadegg's bill passes, would be another $13.80.
 
Verschoor said people would "feel real happy" if they saw any immediate fall in prices. But Gov. Janet Napolitano is not convinced that prices will, in fact, drop.
 
"Even if you suspend the gas tax, it doesn't necessarily mean that the price is going to go down," said gubernatorial press aide Pati Urias. "The distributors could just leave the prices as they are."
 
Allen agreed, saying she wants to require that prices actually drop.
 
Mangels said prices fluctuate daily for a variety of reasons, ranging from the price of crude to consumer demand. She doesn't want dealers forced to drop retail costs by 18 cents no matter what.