Big Lake man gets 10 years

If you suspected Alaskans were paying too much for gasoline in the late 1990s, you were right, according to a recent report from the state of Alaska Department of Law. But a state investigation also found that nothing illegal was going on.

The attorney general's office announced last week it is closing a three-year investigation into the pricing of petroleum products in Alaska. The investigation uncovered no evidence of price fixing at the pumps, but the state lawyers did say prices were higher than normal for about three years in the 1990s.

"During the period between 1995 and 1998 the prices seemed to be especially high," Assistant Attorney General Martin Schultz said.

The attorney general's office blamed a highly concentrated marketplace. There are just two refineries for gasoline in Alaska, one is owned by Tesoro on the Kenai Peninsula, the other by William's in North Pole. That, combined with having just four wholesalers in state makes it easy for competitors to closely monitor each other's activities, according to Schultz.

The investigation was started in 1999 in response to public complaints about the high price of gasoline in Alaska in comparison to other states. Schultz said there was an increase in complaints about gasoline prices in the years immediately prior to the investigation.

The attorney general's office wanted the gasoline wholesalers in state to shed light on what has been called the Alaskan paradox -- even though Alaska has the largest oil field in North America, Alaskan consumers and businesses pay higher gasoline retail prices than their counterparts in the rest of the country.

Using a process called civil investigative demands, the state demanded and received documents dating back 10 years in order to determine fuel-pricing trends. The state reviewed thousands of pages of documents, conducted interviews and reviewed market data to determine whether there was direct evidence of any illegal agreements between companies. State law does not allow the state to attempt to regulate wholesale or retail prices, but it is illegal for a business to collude with competitors to set prices.

The attorney generals office also claims that pricing disparities between Alaska and the Lower 48 narrowed after the investigation was opened.

"The question remains, 'Is it coincidence or did the companies respond to the fact that we were doing an investigation?' And I don't know what the correct answer is to that. But we did find that once we started the investigation, the prices did tend to come down," Schultz said.

A previous federal investigation found that the price of gasoline on the West Coast has averaged 11 cents per gallon higher than the average retail price nationwide. The state report said the price of gasoline in Alaska has tended to be 9 cents per gallon higher than the West Coast price.

But between 1995 and 1998, gasoline in Alaska rose to as much as 17 cents a gallon higher than West Coast prices, according to the Attorney General's office. Beginning in 1999 the spread between prices in Alaska and the West Coast narrowed, more closely tracking the historical spread.