Utah-based Sinclair Oil claims its wholesale gasoline prices in Idaho are fair and competitive and that Idaho's unique market is to blame for any seemingly suspicious gas price disparity.
But the attorney general's office isn't buying the assertion.
"The Idaho Office of Attorney General is troubled by these responses," wrote Brett DeLange, Idaho deputy attorney general, in an Oct. 3 letter to Sinclair.
On Sept. 14, Idaho Attorney General Lawrence Wasden mailed letters to five major oil companies requesting an explanation for the high gas prices throughout the state.
In mid to late September, gas prices in Idaho were the highest in the contiguous United States.
Earl Holding, owner of the Sun Valley Co., is president and CEO of Sinclair Oil.
"Dear Mr. Holding: I write on behalf of Idaho's consumers and businesses concerning the extraordinary high prices your company is currently charging for its products in Idaho," Wasden wrote in a letter dated Sept. 14. "My office is receiving numerous complaints regarding the prices being charged for gasoline throughout our state.
"Comparing Idaho with other states in our region, I cannot find any reasonable explanation for the price disparity in Idaho."
Wasden added that he expected a response from Sinclair by Sept. 30.
In a letter to Wasden dated Sept. 26, Bud Blackmore, senior vice president of marketing for Sinclair Oil, explained that the Idaho market is "sourced primarily by one pipeline system and has no refining capacity," unlike other states.
"The Idaho market is driven by supply and demand and has a limited source of supply during peak demand months and no direct access to spot market driven supply."
Included in the letter was historic data on wholesale pricing in Idaho, Montana, Wyoming and Colorado over the past eight years.
"I believe from this data you would agree that we have in the past and continue to offer a competitive wholesale price to our customers that serve the Idaho market," Blackmore wrote.
Blackmore added that gas prices in Idaho are often behind the national curve. When national prices begin to rise, or fall, the Idaho market is slow to respond.
"You may recall that as early as 60 days ago, when crude oil and gasoline prices were on the increase, that Idaho gasoline prices were some of the lowest prices in the nation," Blackmore wrote. "In fact, wholesale gasoline prices in Casper, Billings and Denver had risen 4.4 percent, 6.23 percent, and 10.1 percent respectively and the Boise rack had a zero percent increase."
DeLange said Blackmore's explanation still does not explain the pricing disparity.
"Your response assumes a competitive market among refiners, but does not address the regional disparity unfairly afflicting Idaho consumers," DeLange wrote. "(T)he fact that Idaho prices have historically been comparable makes the recent disparity even more problematic and of concern."
Furthermore, DeLange said Blackmore's response suggests that there "are barriers in place that preclude the marketplace from fully working and ensuring that supra-competitive prices are not set for Idaho."
"This is of great concern to us," DeLange continued. "While Idaho's businesses can compete with anyone, if the playing field is not level, this can only cause harm to our economy."
When asked if he wanted to comment on the issue, Blackmore said, "No. I think I've already spent enough time on this."
Bob Cooper, a spokesman for Wasden, said despite the conflict "there really is no legal path for the attorney general to pursue."
"High prices are not illegal and gouging is not illegal except at the retail level during an emergency as declared," Cooper said. "And then only at the location of the emergency and for the duration of the emergency.
"Other than that it's a free marketplace."
Idaho Rep. Wendy Jaquet, D-Ketchum, has attempted to change that law to include gouging at the wholesale level. Her attempt was shot down in the state Legislature last year.
