Alaska editorial: Something's wrong with gas prices

Posted: Sunday, January 11, 2009

Alaskans face a "duopoly" of gasoline suppliers in the state. Two refineries - the Flint Hills operation in North Pole and Tesoro's Nikiski facility - provide most of the state's gasoline. So let's see ... Most of our gasoline is made here, yet as of December we were paying about 80 cents a gallon more than the national average.

Why?

The answer has been elusive.

State Sen. Bill Wielechowski has one. Alaskans, he said, are paying for "legal price gouging."

The senator and allies in the House - Rep. Les Gara and Reps.-elect Pete Petersen and Chris Tuck -- have legislation in the works that would effectively roll back the "refiner's margin." That's the difference between what Alaska refiners pay for crude oil and what they charge retailers for their finished product.

What Alaskans want to know is why that margin keeps growing so fast, compared to refiners' margins in Washington state and the national average.

According to a legislative research report, the refiner's margin in Washington as of September 2008 was 60 cents a gallon. The U.S. average was 63 cents a gallon. The Alaska average was $1.25 a gallon - double the Outside margins.

That's the reason Sen. Wielechowski says, "Something's out of whack."

As of Dec. 16, out of whack at the pump read this way, according to a legislative research report:

• Alaska average per gallon: $2.67

• National average per gallon: $1.81

• Seattle average per gallon: $1.82

The price difference is even more striking because it includes all taxes, which in Washington state run 36 cents higher than in Alaska. We pay no state gasoline tax right now, because lawmakers have suspended it for a year. Even when that tax goes back into effect, it's only 8 cents a gallon -- lowest in the nation.

Last fall, Rep. Jay Ramras' House Judiciary Committee held hearings on gas prices. Tesoro declined to participate. Jeff Cook of Flint Hills said he couldn't say much because of the attorney general and Legislature's ongoing investigations. The state attorney, Ed Sniffen, said he couldn't say much because of confidentiality agreements over refiners' proprietary information.

Alaskan consumers have something to say every time they pull up at the pump.

So next week, Sen. Wielechowski hopes to offer legislation empowering the state to investigate refiners whenever their margin is more than 10 percent above a specified Lower 48 average, maybe Seattle's. If refiners could show that the margin was necessary to cover higher labor or other costs in Alaska and still turn a healthy profit, then fine. They could charge the higher amount.

But if they could show no such justification other than it's what the market will bear, then they could face fines and penalties for price gouging.

Why not let the free market determine the price?

"When there's no competition, there really isn't much of a free market," Rep. Gara said.

He's right.

The state has noted the lack of competition before. When former Attorney General Bruce Botelho concluded back in 2002 that there was no evidence of price collusion, he did say that the absence of competition meant that the refiners could enjoy the profits of collusion without the crime of collusion. In other words, they charge more because they can.

Cook, spokesman for Flint Hills, said Thursday he still couldn't comment because of the ongoing investigations. Tesoro spokesman Kip Knudson said that while he couldn't comment on legislation until he sees it, Tesoro would continue to work with the lawmakers and the attorney general's office.

For going on 10 years, Alaskans have asked why our gasoline prices rise as swiftly as the nation's but are sometimes much slower to fall.

We're still waiting for a good answer. If it's not forthcoming, then the state should have the authority to demand one.

BOTTOM LINE: Why do Alaskans pay more for gasoline than residents of any other state? We need good answers -or lower prices.

Fair pay

Don Young can do right again

Today, the U.S. House of Representatives can fix one of the more mystifying U.S. Supreme Court decisions handed down in recent years.

In 2007, the court threw out a woman's pay discrimination lawsuit, filed under federal law, by using a creatively interpreted technicality. To pursue her claim, the court said, Lilly Ledbetter should have filed her suit within 180 days of when her employer decided to pay the illegally low, discriminatory wage.

As the dissenting justices noted, it often takes workers a long time to figure out they're getting paid less than they deserve. Wage and salary information is often confidential, making comparisons with co-workers difficult. The court ruling rewards rule-breakers if they can hide their pay discrimination for 180 days.

That just isn't fair. Which is why the U.S. House voted in summer of 2007 for a common-sense correction to the law. It said the 180 day clock for lawsuits runs from the most recent discriminatory paycheck. The measure, the Lilly Ledbetter Fair Pay Act, died after a Republican filibuster in the Senate.

In the House, Alaska's Don Young was one of only two Republicans to vote for the measure. That was the right call then, and it will be the right call again today.

BOTTOM LINE: Don Young can help fix a bad pay discrimination ruling.



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