Washington, DC, March 30, 2001—For several months, CEI policy analyst Ben Lieberman has pointed out that Environmental Protection Agency regulations helped to cause last summer’s gasoline price spikes in the Midwest, and today a report issued by the Federal Trade Commission  agrees with that assertion.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The FTC report says a nine-month investigation found no “credible evidence of collusion or other anti-competitive conduct by the oil industry.” Instead the Commission concluded that reformulated gasoline (RFG) was one of the factors that contributed to the sharp price increase. RFG is a special blend of gasoline that is required under amendments to the Clean Air Act in the nine metropolitan areas with the most serious smog problems. New EPA requirements for RFG took effect last June and proved particularly difficult to meet with the ethanol-containing blends used in Chicago and Milwaukee.
“Allegations of an oil industry price fixing conspiracy made for a nice red herring last summer, particularly for those trying to divert blame away from the EPA,” says Lieberman. “But now that we know that environmental regulations drove up the price at the pumps, the Bush administration should review other motor fuel regulations that may cause similar problems in the future.”
A Congressional Research Service report also showed anywhere from 25 to 34 cents of the price increase could have been attributed to the RFG situation in the Chicago and Milwaukee areas.
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