Congress turns eye on gasoline prices — again

Here we go again. On April 24, Republican leaders in Congress sent a letter to President Bush asking for an investigation into whether oil companies are “gouging” consumers and if market speculators are driving gasoline prices up, reported Reuters. That came on the heels of a letter signed by 15 Senators urging the Bush Administration to support legislation that would give states new powers to prosecute retailers who engage in so-called price gouging at the pump, reported The Associated Press.

The calls for price-gouging investigations came barely six months after a similar outcry in the days after hurricanes Katrina and Rita knocked the refining and distribution industry in the Gulf of Mexico and on the Gulf Coast for a loop.

In this latest round of price-gouging inquisitions, U.S. Senate Majority Leader Bill Frist, R-Tenn., and House Speaker Dennis Hastert, R-Ill., asked the president to direct the U.S. Attorney General and the Federal Trade Commission “to crack down on any potential price gouging,” noted Reuters.

Republican leaders also asked the Justice Department and the FTC to investigate refinery operations; fuel transportation through the pipelines, marine vessels and trucks; storing and marketing; and gasoline outages to determine whether “there is any manipulation of gasoline prices.” They wrote that “sweeps” of retail distribution centers should be conducted to determine whether retail pricing is in response to changes in market conditions and not “price gouging.”

Across the aisle, the Democratic Senatorial Campaign Committee called the motives behind the Republican leadership’s gasoline price investigation a “scrambling for political cover” to ensure the party will not be accused of “turning a blind eye” to “soaring gasoline costs,” wrote Reuters.

The DSCC said the GOP’s call to action lacks credibility because the party has “allowed oil and gas companies to line their campaign accounts with cash when they should have been cracking down on price gouging and rising gas prices.”

In the letter from the 15 Senators, they expressed their concerns that federal anti-price gouging legislation should be enacted prior to the summer driving season.
The members of Congress noted that the legislation was supported by nearly a third of the chamber and endorsed by a number of state Attorneys General. The bill seeks to give the states new powers to prosecute alleged price gougers in the wake of national emergencies.

“One of the hallmarks of this legislation is that it would also apply to the wholesale fuel markets, an important distinction, given that it is often the large vertically integrated oil companies that dictate the prices that gasoline retailers can charge,” the senators wrote, adding, “While the oil companies rake in record profits, it is often these retailers that bear the brunt of consumer anger.”

The FTC is currently conducting an investigation into gasoline price “gouging” as mandated last year following fall’s price spikes. Congress Daily reported that in an interim report to Congress in March and in private briefings with congressional staff, the FTC indicated it has cast “a broad net and used subpoenas” to collect information from nearly 200 U.S. oil companies and refinery operations.

Congress Daily noted that the FTC said it had made “considerable progress” collecting information, but added that it was too early “to draw conclusions at this time.”

“The retail gasoline market is the most price-transparent and price-competitive market in the nation,” NACS Vice President of Government Relations John Eichberger told NACS Daily. “Retailers compete fiercely for very price-sensitive customers who will abandon a retailer for pennies on the gallon. The petroleum market is trying to overcome significant regulatory challenges while still reeling from the damaging effects of last year’s hurricanes and the posting of historically high crude oil prices. NACS urges Congress to look carefully at the factors affecting prices, be patient as the market overcomes these challenges and practice restraint when considering actions that might further complicate the supply and distribution system.”