Extortion At The Gas Pump?

GENERIC gas, guzzlers, fuel, economy AP

For some commuters in California, their car is no longer an option.

"It cost me about $100 to gas up my car for the week. So I just take the commuter red line," says Angela Ferguson.

As CBS News Correspondent John Blackstone reports, across the country a question now comes with every fill-up: Is there gouging at the gas pump?

California's Attorney General Bill Lockyer has been investigating gas prices though he's found no evidence of price manipulation so far.

"We know the gasoline spikes are occurring, the prices are outrageous," says Lockyer.

According to Lockyer there has been "no smoking gun, but we all think we heard a shot."

Gas station owner Dennis DaCota says he has no doubt oil companies are manipulating prices and maximizing profits from neighborhood to neighborhood with a practice called "zone pricing".

"Zone pricing is basically a demographic study of the income, the competition in that area and they determine what they can extract in that given market area," says DaCota.

Zone pricing means a dealer like DaCota, located in a relatively affluent area, pays higher wholesale price than another dealer just a few miles away.

"Same truck, same day, same terminal, same gas … different price," says DaCota.

The oil companies say zone pricing gives them flexibility to adjust wholesale prices to remain competitive. Others say competition is quickly disappearing as big oil companies grow bigger.

A wave of mergers has brought together the biggest oil companies. In California the mergers have left just a handful of giants dominating the business from refineries to the corner gas station.

"It's putting the wolf in charge of the hen house. You don't normally let that happen," says San Diego attorney Tim Cohelan.

Cohelan is suing oil companies charging they've conspired to raise prices in California. He says drivers elsewhere better brace themselves.

"The same pattern and the same types of behaviors the same refinery closures and cooperative agreements have now spread across the United States," says Cohelan.

The oil companies blame high prices on everything from war fears to new pollution rules in California. The prediction is prices haven't stopped rising yet.
  • Sue Chan

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