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Lawmakers’ blood pressure rises with prices at the pump |
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Posted: 05/16/07 07:30 PM [ET] |
In an annual sign of spring that’s becoming as regular as the robin’s return, lawmakers took the oil industry to task yesterday over the high price of gasoline.
The House Judiciary Committee’s Antitrust Task Force, created by Democrats to examine corporation collusion, pressed oil representatives on the reasons behind another round of price spikes with summer driving season approaching.
Rep. Bart Stupak (D-Mich.), author of a bill that would make price gouging a crime, said prices at the pump back home set new highs.
“While consumers pay record prices, oil companies make record profits,” he said.
Stupak is the chairman of the House Energy and Commerce Oversight and Investigations Subcommittee, which will hold a hearing on gas prices next week.
With lawmakers revved up about a hot-button political issue, Big Oil is fending off several legislative measures that could hit its pocketbook, and industry lobbyists say that Congress’s efforts will only exacerbate price pressure.
Rep. John Conyers Jr. (D-Mich.), chairman of the House Judiciary Committee, has introduced a bill dubbed “Nopec,” after the Organization of the Petroleum Exporting Countries (OPEC). The measure would allow Americans to sue oil-producing states with operations in the United States under domestic antitrust laws. OPEC countries produce around 40 percent of the world’s oil.
Of most immediate concern to the industry are efforts to criminalize price gouging and adopt steep fines for violations of the law.
The Senate Commerce Committee already passed a price-gouging bill introduced by Sen. Maria Cantwell (D-Wash.) as an amendment to an alternative fuels and gas standards bill.
Meanwhile, Stupak’s bill would criminalize selling gasoline at prices that are either “unconscionably expensive” or appear to take advantage of an emergency like a flood, according to the bill’s congressional summary.
Price-gouging legislation has bipartisan appeal. Rep. Heather Wilson (R-N.M.), who also testified before Conyers’s panel yesterday, reintroduced a bill requiring the Federal Trade Commission to promulgate a price-gouging rule.
Oil lobbyists are working against all three measures, arguing that they amount to price controls that unbalance natural market forces. The unintended consequence would be to restrict supplies further in certain areas, they say.
At the Judiciary panel yesterday, John Felmy, chief economist of the American Petroleum Institute, defended the industry against charges that it manipulates prices.
He said the industry has set records for gasoline production, but domestic suppliers were working against lower-than-normal levels of imports because of refinery maintenance in Europe and a port-workers’ strike in France. Usually, about 12 percent of the nation’s gas supply comes from outside the United States.
“In short, the recent price increases reflect the forces of supply and demand,” Felmy said in written testimony. The American Petroleum Institute represents 400 oil and gas companies, including the largest that make up Big Oil.
There are rules that already prevent oil companies from colluding on prices, but critics say they may not be enough. Wilson said she introduced her bill out of concern that “current law does not adequately address price gouging that does not rise to the level of antitrust prohibitions.”
Most states have price-gouging laws for the sale of retail gasoline. The federal efforts target wholesale prices. Industry representatives say investigations have found little evidence of price gouging, and note that federal regulators at the Federal Trade Commission have expressed wariness over congressional efforts to legislate on the issue.
“The evidence is overwhelming that refiners are not withholding supplies or otherwise manipulating the market,” Felmy said in his testimony.
Stupak noted, however, that gas prices have increased this year from levels a year ago even though the cost of a barrel of oil has gone down. That contradicts industry claims that gas costs depend on world oil prices.
“Clearly, there is more at play than simply the world crude oil market,” he said.
Meanwhile, oil industry advocates complain that Congress and the administration don’t help by pushing contradictory policy efforts.
“We’re getting mixed messages,” said Charlie Drevna, chief lobbyist for the National Petrochemical and Refiners Association.
President Bush this week directed federal agencies to craft a rule requiring much higher production levels of alternative fuels. But after Hurricanes Katrina and Rita squeezed domestic refining capacity, the administration and lawmakers called on industry to invest more money to expand production.
It doesn’t make sense for investors to spend money on refinery expansion while policymakers are looking to reduce demand for gasoline, said Drevna.
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