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Press Release of Senator Cantwell
Cantwell Calls for Gas Price-Gouging Ban, Greater Oil Industry Transparency by Memorial Day
Summer gas slated to soar 25 cents per gallon above 2005 prices Study shows recent price increases not the result of supply and demand disruptions; oil company excuses don’t add up
Monday, April 24,2006
TUKWILA, WA – Sunday, U.S. Senator Maria Cantwell (D-WA) joined oil industry experts at an independently-owned gas station in Tukwila to demand transparency in the oil and gas industry and push for a national ban on gas price-gouging. At the event, Cantwell highlighted a study showing that recent gas price increases in Western states were not, as oil companies claim, the result of ethanol mandates, restrictions on environmentally harmful additives, or supply and demand disruptions.
“Skyrocketing fuel prices pose a grave danger to the American economy,” said Cantwell, a member of the Senate Energy Committee. “The cost of gas in our state has jumped 60 cents per gallon since January. This is nothing more than a tax imposed on our economy by oil companies. American consumers deserve to know what’s behind these prices. They deserve the truth and they deserve reassurance that the federal government isn’t going to stand by and allow Enron-style profiteers to pick their pockets every time they fill up at the gas pump.”
Sunday, to help get the answers American consumers deserve, Cantwell wrote to Senate Majority Leader Bill Frist (R-TN) asking for his support in enacting legislation to protect American consumers from price-gouging at the gas pump this summer. Legislation introduced by Cantwell last year would outlaw gas price-gouging, impose tougher fines and criminal penalties on violators, and give federal and state authorities new powers to protect Americans, ensure greater market transparency, and go after companies that manipulate oil and gas prices. 28 states already have similar laws on the books. Cantwell’s legislation would create a national standard, necessary given the interstate nature of American fuel markets. 57 senators supported the legislation when it came to a vote last year—3 short of the 60 votes needed at the time.
“…unless Congress passes a law, an eventual finding that price gouging is occurring in U.S. fuel markets will be completely meaningless …[because] the federal government will still have little if any authority to do anything about it,” Cantwell wrote in her letter to Majority Leader Frist. “…it is my hope that, as policymakers, we have learned one of the most important lessons of the Western energy crisis of 2000-2001: when it comes to the vital energy commodities that power our economy, proactive consumer protection on the part of the federal government is a far better course of action than attempting to pick up the pieces and fashion some measure of justice after billions of dollars have been stolen by unscrupulous actors in a dysfunctional market. My constituents have learned this lesson the hard way. More than four years after Enron’s scandalous collapse into bankruptcy, ratepayers in my region are still fighting for a measure of relief from its schemes to inflate Northwest energy prices. It’s my hope that we can come together in a bipartisan manner to pass price gouging legislation…”
Several studies looking into oil industry practices have already been initiated, but this is no excuse to postpone legislation enacting a ban on profiteering at the gas pump.
Last week, Tim Hamilton, an internationally known petroleum industry consultant, released a new report showing that the increases in Western gasoline prices since January led directly to increased oil company profits, and were not due to supply or demand disruptions. While oil companies blame an ethanol shortage and the phase-out of gasoline additive and hazardous groundwater contaminant Methyl Tertiary Butyl Ether (MTBE), these factors do not explain the run-up in prices, especially considering that Washington and California banned MTBE in 2004. When Washington’s MTBE ban went into effect, retail gasoline prices averaged just $1.99 per gallon. The ethanol excuse also falls short. Washington state does not need to blend additional ethanol with its gasoline to meet Clean Air Act standards, and yet, the increase in Washington state’s gasoline prices since April 2004 has actually exceeded California’s by approximately 14 cents per gallon.
According to AAA’s daily fuel gauge report, prices in Washington state averaged $2.87 per gallon on Saturday—34 cents above last month’s prices and 38 cents higher than the price of gas this time last year. Prices in Bellingham topped state charts, averaging $3.01 per gallon on Saturday morning—ironic given Bellingham’s proximity to Washington state refineries. According to the federal Energy Information Administration, prices in Washington state had climbed an average of 60 cents per gallon at the start of last week to $2.79 per gallon compared to early January when prices averaged $2.19 per gallon.
Cantwell’s letter to Majority Leader Frist can be viewed here