Summary: Pursuant to a congressional request, GAO provided information on the factors contributing to the rise in gasoline prices in the first half of 1985, including the effect of two mergers in 1984 and actions the Federal Trade Commission (FTC) took regarding the mergers.
GAO found that: (1) a shift occurred in the sources of gasoline supplied in 1985 compared with the previous 4 years; (2) only a small percentage of the gasoline supplied in the first few months of 1985 was from domestic production; (3) the increase in market concentration as a result of two oil company mergers would have had only a small effect on wholesale gasoline prices; and (4) FTC required the merging companies to divest specified assets and take other actions to reduce the potential anticompetitive effects of the mergers. GAO also found that the increase in gasoline prices could be related to: (1) increased costs associated with the required reduction in the amount of lead in gasoline; (2) the refining industry's low profitability in 1984; and (3) reduced domestic gasoline production.
