Supreme Court Throws Out Gas Prices Suit

[TrainTrac]

Funny, this didn't seem to get much publicity in the mainstream news...

Supreme Court Throws Out Gas Prices Suit



By GINA HOLLAND, Associated Press Writer

Tue Feb 28, 11:07 AM ET



The Supreme Court on Tuesday threw out a lawsuit that accused two oil companies of inflating gas prices by at least $1 billion.



Justices unanimously said gas distributors did not prove that ChevronTexaco Corp. and Shell Oil Co. violated antitrust laws in the joint venture, which ended four years ago.



Justice Clarence Thomas, writing for the court, said the companies had a legal partnership. "The pricing decisions of a legitimate joint venture do not fall within the narrow category of activity that is per se unlawful" under federal law, Thomas said.



At the time of the deal in 1998, ChevronTexaco was still Texaco. The company joined with Shell to form enterprises to handle refining and marketing of their gasoline.



Gas distributors filed a class-action lawsuit in California, alleging that Texaco and Shell had used the partnership to fix gas prices in violation of antitrust provisions of the Sherman Act.



A ruling in favor of the gas distributors would have had broad implications for business mergers beyond the oil industry.



The case was argued at the court last month, and justices signaled then that they were not concerned that the giant gas companies went too far. Chief Justice John Roberts said that joint ventures must price their products, and it shouldn't matter whether they are sold as a new brand or under the Shell and Texaco labels.



Gas price-fixing has been a sensitive subject over the past year for Americans who experienced surging prices that exceeded $3 a gallon in many parts of the country.



A trial court judge dismissed the lawsuit against the oil companies. But the San Francisco-based 9th Circuit U.S. Court of Appeals ruled there was evidence that the ventures had improperly restrained trade.



The high court erased that decision. Justice Samuel Alito did not participate in the case because he was not on the court when the appeal was argued.



The cases are Texaco v. Dagher, 04-805, and [Shell Oil v. Dagher, 04-814.



On the Net:



Supreme Court: http://www.supremecourtus.gov/



Copyright © 2006 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.



Copyright © 2006 Yahoo! Inc. All rights reserved.

 

[TrainTrac]

And just for s's & g's, here's a little refresher on gas prices and supply and demand:

Blame good ole' supply and demand for high gas prices, not Big Oil



Thomas Sowell



Originally posted on March 08, 2006



The Supreme Court's recent 8 to 0 decision (Justice Alito not yet participating) shot down a claim that oil companies were colluding in setting prices. That claim was upheld by the far-left 9th Circuit Court of Appeals but neither liberals nor conservatives on the Supreme Court were buying it.



This unanimous vote should also tell us something about those politicians who are forever blaming rising gasoline prices on oil company collusion and "greed." There is no point exposing a lie unless we learn to be skeptical the next time the liars come out with the same story.



After Hurricane Katrina destroyed a lot of oil processing capacity around the Gulf of Mexico, there was — surprise! — less oil being processed. With less oil being supplied — surprise again! — gasoline prices rose.



However much economists rely on supply and demand to explain price movements, politicians need villains, so that the pols can play hero. Big Oil is a favorite villain and has been for decades.



There is nothing like the political melodrama of summoning oil company executives to televised hearings before some Congressional committee, where politicians can wax indignant at Big Oil's profits.



SUPPLY, DEMAND



It so happens that Big Government takes more money in taxes out of a gallon of gas than Big Oil takes out in profits. But apparently somehow taxes don't raise prices. They certainly don't raise indignation from the politicians who voted for those taxes.



After the oil processing facilities were repaired and put back in operation — yet another surprise! — prices came back down. Supply and demand has been doing this for centuries but apparently the word has not yet reached some politicians.



There is another aspect to supply and demand. As countries like China and India have in recent years begun allowing more market transactions to replace government controls, their economies have begun growing much more rapidly.



Growing economies mean rising demand for food, for shelter, for more of the amenities of life. That in turn means a rising demand for oil, leading to rising oil prices around the world.



Those who think in terms of supply and demand suggest, we ought to supply more oil to meet the rising demand. But the very politicians who are noisiest about the high price of oil are the most bitterly opposed to increasing the supply.



Drilling for more oil might disturb some animals or birds or fish. Worse yet, on a clear day people with beachfront homes might be able to see an offshore oil rig out on the horizon.



FACTS DON'T COUNT



Even those who can't see oil being drilled in some isolated hinterland in Alaska would know that the drilling was going on, and that would upset their sensitive natures.



So we are left with nothing we can do about the rising demand for oil around the world, nothing we are willing to do about increasing the supply of oil, and angry denunciations of rising oil prices.



The politically correct answer is that we must have "alternative energy sources" and "conservation." At what cost — in money, in jobs, in constraints on people's lives — is too crass a question for those delicate souls who are dead set against producing more oil.



These souls are apparently not so delicate, however, that they are bothered by the deaths of coal miners who get killed producing one of those "alternative energy sources" that sound so nice when you don't count the costs.



Many of the same delicate sensitivities have kept nuclear power plants or hydroelectric dams from being built in the United States for decades. Some in liberal political or media circles talk o

 

[Thomas Rogers]

Yup...it was all supply and demand.



I am sure that the price increases during the last hurricane season were only due to the decreased supply caused by the Gulf Coast outtages; were directly proportional to the reduced supply, and timed such that the prices didn't actually rise until the supply actually diminished.



Further, I am sure there was no overly speculative and excessive, day-after increases that later proved to be too excessive when prices righted themselves a few months later AS demand continued to grow while North America entered the late Fall and early Winter months.



(note the sarcasm in the above)



Sure, I do think supply and demand was the major cause here, but that doesn't discount the fact that in retrospect prices were raised higher than they needed to be...mostly because they could be. Supply and demand was part of it...a captive marketplace was the rest of it.



I understand supply and demand, I undertand that as a consumer we can negate the price raises by changing our behavior thus reducing demand, thus increasing supply and lowering price...but we have proven as Americans we can't/won't do that with fuel, at least not in any meaningful measure in a matter of a few days or weeks.



TJR