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FOR IMMEDIATE RELEASE
August 16, 2007
Fact-finding phase of Washington’s gas price investigation completed

OLYMPIA…Attorney General Rob McKenna today released the first phase of Washington’s 2007 gas prices investigation.

McKenna announced in April 2007 he was teaming up with Gov. Chris Gregoire and the state Department of Community, Trade and Economic Development  to conduct  the investigation based on strong public and private concern about escalating gas prices and the need for new research to help explain factors that influence Washington’s gas prices.

The last such comprehensive study into Washington gas prices was published in July 1991 by the state Energy Office (now CTED’s Energy Policy Division).

“People across the state have been frustrated with increasing gas prices — as are we,” McKenna said.  “This fact-finding report helps us see how Washington compares with other states, how our cities and counties compare with one another, where our gas supply comes from, and what goes into the price of a gallon of gas. In the next phase, we will analyze anomalies revealed by the data. We’ll also examine possible explanations for price differences across the state and for significant changes in prices over time.”

Key findings in this fact-finding phase of the investigation include:
• Retail gas prices in the 1991 study tended to be lower in the Seattle area than in Eastern Washington. This trend has reversed, with the Bellevue and Bellingham reporting the highest average retail prices in recent years.
• Crude oil costs increased by more than 76 cents per gallon from December 2003 to May 2007; these costs made up roughly 50 percent of the cost of a gallon of gas in July 2007.
• Refinery margins increased by nearly 94 cents per gallon from December 2003 to May 2007, making up roughly 22 percent of the price of a gallon of gas in July 2007.
• The current total fuel excise  tax in Washington is roughly 54.4 cents per gallon—the highest total fuel excise tax in the nation – in part because Washington relies on its gas tax for most of its highway funding.
• Consumption rates have remained stable in Washington since 2000.
• Washington refineries routinely produce enough gasoline and diesel to meet Western Washington's and Oregon's needs. However, only two to five days worth of gasoline is available to bridge short-term supply interruptions.

“We will share the results of this fact-finding report with the public, lawmakers, city and county officials and other policy makers to help them better understand the factors impacting gas prices,” McKenna said. “During the next phase of the investigation, we will continue to gather information and conduct additional analysis to help leaders develop public policy if necessary.”

Phase 2 of the investigation will explore:
• Differences in the wholesale cost of gasoline from different supply sources;
• Anomalies in reported rack prices and at the terminals;
• Transportation costs to the terminals;
• Transportation costs from the terminals to retail stations;
• Costs of retailing;
• Competitive conditions at retail; and
• Diesel costs.
It is expected to take at least six more months to complete. {UPDATE: We expect to release the final report in April 2008.}

The Attorney General’s Office is overseeing the investigation with assistance from CTED. To assist with the research, state agencies retained Dr. Keith Leffler, an economist at the University of Washington with expertise on the state’s petroleum industry.

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Contacts:
• Kristin Alexander, Seattle Media Relations Manager, 206-464-6432, cell: 206-437-2654
• Janelle Guthrie, Communications Director, 360-586-0725

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