Thursday morning headlines

Gasoline finger-pointing: Where to begin? NY Sen. Charles Schumer says it's probably time to break up the oil companies, which he describes as current-day robber barons. Many industry watchers say that tearing up the industry is a great idea -so long as you want everybody to be driving a bike to work. Size really does matter in the energy biz because exploring new fields in hopes of pumping up production requires big bucks. Little guys need not apply. The bigger issue as it relates to prices is refinery capacity - and on that score everybody is in agreement that supplies are not keeping up with demand. It’s the why part that has the various sides in a tizzy. In today's NYT, industry officials said that they've been forced to scale back their plans for new refineries because the government might force them to increase the supply of ethanol and other biofuels. Not that there's been any huge push to add refineries in the U.S. - they're extremely expensive to build and subject to all kinds of environmental regulations (and doubtless litigation). Meanwhile, the House is considering a bill that would define and outlaw "price gouging" of gasoline. From MarketWatch:

While the market for crude oil is truly a global one, the market for gasoline is extremely localized, said Diana Moss, vice president of the American Antitrust Institute. She said the FTC had found that about two-thirds of the local refining markets are highly concentrated, based on examinations of mergers. In the retail marketing segment, more than half of the local markets are highly concentrated and the remaining are moderately concentrated. A company that controls the bottleneck in the production line - such as a refinery - can command much greater market power than its market share would indicate, Moss said.

In its merger investigations, the FTC analyzes market concentration in each segment - refining, transportation or marketing - independently, Moss said. It does not consider "vertical theories of harm," such as the possibility that a vertically integrated refiner could shut out a rival gasoline retailer in order to increase profits at its own branded-stations. That's exactly what the major oil companies are doing in California, charged Dennis DeCota, executive director of the California Service Station and Automotive Repair Association, a trade group of independent gas stations. "The majors are in lock step with one another as it relates to wholesale pricing, with the exception of ARCO/BP," DeCota said. "The competition between branded stations and independent stations is all but gone."

State Fund scandal: It's gotten very little notice, but we're talking about possible fraud and misappropriation of up to $1 billion at the state-run workers compensation company. Charles Savage, general counsel to the State Fund board, has been let go, the third top executive to get the boot. The reason for Savage's firing wasn't disclosed, but the LAT reports that investigators are looking into reported payments made to firms connected with two former board members who resigned last year.

The inquiries are aimed at alleged abuses in the payment of so-called administrative fees to companies controlled by former board members. The fees went to companies that organized industry-specific safety groups that made their corporate members eligible for discounted rates on workers' comp insurance.

Insurance Commissioner talks tough: Bet you don't even know his name. No, it's not John Garimendi. Nope, Jerry Brown is the attorney general. C'mon....c'mon.... you can do it... Oh, all right, it's Steve Poizner, and he said that Allstate Corp. might have to issue refunds to policyholders if the state determines its rates are excessive. The commissioner said he has suspicions because other insurers have reduced their rates while Allstate is seeking a 12 percent rate hike. "I am drawing a line in the sand,'' Poizner said. A couple of weeks back, Allstate said it will stop selling new residential policies in the state because it's too "catastrophe-prone.'' The other insurers are staying put. SF Chronicle

Graduates leaving California: High housing prices are a main culprit, according to a new report by the Public Policy Institute of California. This could lead to a shortage of highly skilled workers, something that helped fuel the state's economy after World War II. And that could lead to fewer companies operating here, smaller tax receipts and widening income inequality. But the study isn't able to pinpoint the size of the out-migration, so the extent of the problem is unclear. And heck, we still have the weather. Mercury News

Amgen inches back: The Thousand Oaks-based company's decision to borrow $4 billion to buy back shares has raised concerns about the additional debt load (ratings agencies took note of a 40 percent increase in debt), But at least the stock price is up, which is what should happen when companies buy back shares. This morning, Amgen was up about half a percent. LAT

Getting sick at Merrill: Or saying you're sick and enjoying a three-day weekend in the Hamptons or wherever. The brokerage giant is drastically changing its crazy sick day policy that had allowed employees up to 40 days a year. Now, it's just three days a year (without valid excuses) and termination could result after eight sick days (talk about an overreaction). The average sick time benefit is 8.1 days a year, with workers, on average, taking 5.2. The new Merrill policy is mostly aimed at preventing workers from playing hooky on Friday. LAT