As gas prices continue to skyrocket in California, members of Congress from the Golden State are asking the Federal Trade Commission to investigate business practices that may have led to the rise in prices at the pump.

What You Need To Know

  • California's congressional delegation is asking the Federal Trade Commission to investigate reasons behind the increase in gas prices

  • Rep. Mike Levin and 36 other California Democrats have asked FTC Chair Lina Khan to investigate "an unusal spot market transaction" in mid-September that preceded a spike in gasoline prices

  • The congress members are concerned the transaction "may represent market-distorting behavior between traders and refiners" in violation of FTC rules

  • According to AAA, the average price for a gallon of gas in California is $6.079; the average cost nationwide is significantly lower at $3.832

In a letter obtained by Spectrum News, Rep. Mike Levin, D-Calif. and 36 California Democrats are asking Federal Trade Commission Chair Lina Khan to investigate “an unusual spot market transaction” in mid-September that led to a recent price spike that raised the cost of a gallon to over $6 in some areas of California.

“The [Division of Petroleum Market Oversight] notes that on Friday, September 15, 2023, an unusual transaction took place, which caused the price of gasoline to increase by nearly 50 cents per gallon on the California spot market. Since many gasoline supply transactions are pegged to the most recent prices reported to the Oil Price Information Service (OPIS), and there were no other trades reported to the OPIS over the next two trading days, that single trade led to price increases into the following week. These elevated costs have been passed onto California drivers, likely costing them millions of dollars at the pump,” the letter reads.

“We are concerned that this spot market transaction may represent market-distorting behavior between traders and refiners under the Federal Trade Commission’s (FTC) 'Prohibition of Energy Market Manipulation Rule.' We urge you to work with the California DPMO to investigate this transaction further.” 

The letter was also sent to Attorney General Merrick Garland, Secretary of Energy Jennifer Granholm, California Attorney General Rob Bonta and Tai Milder, the director of the Division of Petroleum Market Oversight for the California Energy Commission.

According to AAA, the average price for a gallon of gas in California is $6.079; the average cost nationwide is significantly lower at $3.832.

“I am extremely concerned with the volatility of gasoline prices in California,” said Rep. Levin in an interview with Spectrum News on Friday. “We need transparency and accountability. The fossil fuel industry needs to be held to account for price gouging and market manipulation. And the average person in California needs to understand the fault of the fossil fuel industry and the fault of the oil companies in all of this and we're gonna get to the bottom of it and make sure that happens.”