A familiar pattern: Gas: Prices go down when probes begin.

PressTelegram Article Published: Wednesday, April 02, 2003 - 7:50:02 PM PST

The state's Energy Commission did not find any evidence of price gouging by the oil industry in connection with recent record-high gasoline costs. Fine, but we're hardly relieved.

Simply because the commission didn't find evidence doesn't mean it didn't happen. The fact that gas prices tend to go down once the state probes begin a pattern that appears to be repeating itself here is highly suspicious.

And, even if we accept that there was no gouging, California's oil and energy markets are so ripe for manipulation that it could happen at any time.

Gasoline prices hit a $2.14 average in mid-March, a record high for the state. Prices began to drop by a few cents last week.

Certainly there are market factors at work, such as the unrest in Venezuela, the higher costs of adding Ethanol to gasoline instead of the more toxic MTBE (by federal mandate), and others. However, refinery production increased while prices were going up, so tighter supplies can't be blamed here.

Much of the problem is a lack of competition. California is so isolated from other gas-producing states that it is highly vulnerable to price increases. It doesn't take the kind of overt collusion that caused the energy crisis companies can just watch each other's pump prices and keep raising them along with competitors in a vicious circle. It may not be as evil as what Enron did, but it's still wrong.

Evidence or no evidence, the state needs to keep a constant and vigilant eye on the oil and energy industries to protect consumers from price gouging.