04.25.06

Republican Leadership Denies Cantwell Vote on Gas Price-Gouging Ban

Cantwell vows to keep up fight to implement consumer protections, secure energy independence, accelerate alternative fuel developmentFederal government has little power to respond to gouging at the gas pump; Senator Seeks Bipartisan Agreement

WASHINGTON, DC – Tuesday, on the Senate floor, U.S. Senator Maria Cantwell (D-WA), a member of the Senate Commerce and Energy Committees, urged her colleagues to take up legislation she introduced last year to make gas price-gouging a federal crime. Republican leaders blocked her request for a vote on her legislation, further delaying the implementation of much-needed price-gouging protections.

“Five years later, we in Washington state are still suffering from market manipulation during the Western energy crisis,” said Cantwell. “Today’s staggering prices at the pump are placing an added strain on the budgets of families, farmers, and businesses statewide. We need a serious plan to hold the oil industry accountable and keep our economy growing. Consumers need to be sure that they aren’t being gouged at the gas pump this summer. Without adequate protections, it doesn’t matter if investigations uncover evidence of price-gouging, because the federal government won’t be able to do a thing about it.”

Cantwell has actively combated energy market manipulation since taking office, and was able to secure language in last summer’s energy bill to ban market manipulation in the electricity and natural gas markets. Last fall, Cantwell introduced the Energy Emergency Consumer Protection Act, cosponsored by nearly one third of the Senate, to apply similar standards to the oil and gas industry, and provide emergency protections against gouging at the gas pump. Last November, anti gas price-gouging legislation offered by Cantwell came up for a vote on the Senate floor, but fell just three votes short of the 60 votes needed for passage at that time, though it did receive the support of 13 Republicans. Earlier this month, Cantwell and 15 of her Senate colleagues wrote President Bush urging him to support her bill and help ensure that this important consumer protection measure becomes law before Memorial Day. Tuesday, Cantwell took to the Senate floor and urged the full Senate to consider her anti gas price-gouging legislation immediately.

“Today I called on the Senate to take up and pass strong measures to guard against price-gouging at the gas pump,” said Cantwell. “We’ve been investigating gas prices for months now. It’s time to act, and I’m going to push to give real teeth to consumer protection laws before Memorial Day.”

The Energy Emergency Consumer Protection Act, introduced by Cantwell last September, would outlaw oil price-gouging during national emergencies, impose tougher fines and criminal penalties on violators, and give the Federal Trade Commission and state Attorneys General new powers to protect Americans from artificially inflated gas prices. Based on Cantwell’s measures passed last summer banning Enron-style manipulation schemes in the electricity and natural gas industries, this bill empowers federal regulators to ensure greater market transparency and go after companies that manipulate oil and gas prices. Several states already have similar price-gouging laws on the books. Cantwell’s legislation would create a national standard to compliment state laws, which is necessary given the interstate nature of American fuel markets.

Tuesday’s efforts are the latest in a long line of work by Cantwell to secure fair, stable energy prices for American families and businesses. At a hearing last November, to get to the bottom of years of rising fuel costs as well as possible price gouging following Hurricanes Katrina and Rita, Cantwell questioned oil company CEOs about below-average reserve capacities, unregulated trading markets, and exporting of gasoline during times of record U.S. prices. In response, oil executives told Cantwell they would provide data to answer her questions, but later refused to disclose much of the requested information. To get the answers oil companies refused to provide, Cantwell and Senator Daniel Inouye (D-HI), Co-Chairman of the Commerce Committee, requested a Government Accountability Office (GAO) investigation into fuel inventory practices, refining capacity, and market transparency. The GAO has said it will begin the investigation later this year.

Cantwell is leading a coalition of 52 members of Congress asking President Bush to convene an emergency energy summit, open to all stakeholders, to protect consumers, promote innovation, and spur economic growth through the development of long-term solutions to America’s energy needs. In February, Cantwell met with President Bush to discuss the importance of breaking America’s oil addiction by developing fuel sources and putting alternative fuels on equal footing with more traditional sources of energy. Cantwell is also a sponsor of the Protecting America’s Competitive Edge Acts, which, in additional to launching a national bid to ensure continued American economic competitiveness, would create an office within the Department of Energy to support groundbreaking energy research.

Cantwell is also a cosponsor of new bipartisan legislation introduced Tuesday with Senators Diane Feinstein (D-CA), Olympia Snowe (R-ME), Carl Levin (D-MI), and Tom Harkin (D-IA) to enhance the transparency of energy commodity trading—80 percent of which is taking place beyond the reach of federal regulators, thanks to the “Enron loophole” in U.S. commodity trading laws created in 2000. Cantwell has also sponsored legislation to set a national goal of reducing domestic oil consumption equivalent to 40 percent of America’s projected imports over the next 20 years, and has authored a measure that would require more accurate consumer information on the fuel efficiency of new vehicles. Cantwell has also been a consistent advocate of measures to promote greater use of domestically produced biofuels, increase the availability of flex-fuel vehicles on American roads, and dramatically improving national fuel economy standards.

[A transcript of Cantwell’s remarks on the Senate floor follows below]

“I come to the floor and join my colleagues on both sides of the aisle who have been here for the better part of today, discussing the President's comments this morning about energy legislation and about price gouging and about the Department of Justice and Federal Trade Commission investigation of energy prices.

“Many of my colleagues here in this body know how important this is, and how important it is that we move forward. Yet I think we have actually been investigating for months. The fact remains that we need to do a more aggressive job in looking at the issue of price gouging. Fifty-seven Senators here supported legislation in November of last year, giving the tools to the FTC, the attorneys general, and to individuals who are responsible at the Department of Justice to investigate price gouging. It is that same legislation that I think would help us in moving forward today, giving consumers confidence as they head into the summer driving season that we are doing everything in our power to get serious about a Federal price gouging ban and that we are going to make it a Federal crime.

“This legislation would create a new ban on price gouging during national energy emergencies, giving the President authority to declare that emergency. It would give the Federal Trade Commission and State AGs and the Department of Justice the ability to levy civil and criminal penalties for proven price gouging up to $3 million and 5 years in jail. And, on an ongoing basis, it would put in place a new ban on market manipulation and giving false information to the FTC or the Department of Justice.

“If you think about it, it is similar to some of the requirements for those involved with the Securities and Exchange Commission and the Commodity Futures Trading Commission, and the standards they are required to meet. This bill also gives the FTC the authority to levy fines up to $1 million for each violation of market manipulation, that is the market manipulation and false information prohibitions in this legislation.

“Some people would say $1 million for price gouging doesn't sound like a lot of penalties, but this is $1 million for each violation of the market manipulation ban. If you think about it, in the context of the market manipulation that is being discussed right now in the Enron trials, on an ongoing basis there were probably hundreds of instances of market manipulation related to Enron.

“My colleagues and I offered this price gouging legislation on the floor and it received 57 votes, so I think it is time the Senate comes together on a very aggressive approach to tell consumers that we will protect them this summer. The reason I say it is imperative we do this now is because for the last 5 years in the West we have suffered through the aftershocks of the western energy crisis. That is, we have suffered the consequences in my State of the market manipulation that Enron engaged in. And five years later, really, we have gotten very little relief from Federal regulators on that issue.

“What happens during periods of dysfunctional markets, where there is a lack of transparency, is that many people are hurt. Businesses are hurt, individual consumers are hurt, even school districts are hurt. We had one school district in Washington state that basically had to pay $2 million in additional energy costs because of Enron and manipulated energy prices, and thereby ended up not hiring teachers or buying books.

“All this leads to a simple and inescapable conclusion. And that is, when it comes to energy commodities that power our economy, we have to be very aggressive at protecting consumers. We need to do everything in our power right now at the Federal level to put us on the right course and to fashion legislation that will help protect consumers now.

“If you think about the President's request, he is saying the Department of Justice and the FTC should investigate. We do not even have the authorities and remedies in current law that would help in pursuing these cases and bring these individuals or corporations to justice if market manipulation is found. So I encourage my colleagues to move quickly on legislation that would give the Federal government the true tools we need to investigate market manipulation and to pursue remedies on behalf of consumers. Let's not wait several months into the summer season, as consumers are already being hurt at the pump, to come to this conclusion.

“Since we have already had 57 Senators, a majority of the Senate, support this legislation, why not pass it out of the Senate and give consumers the confidence that, as they hear the earnings reports from oil companies in which they are making billions in profits, we are not going to give them a pat on the back. Instead, we are going to give a helping hand, to protect American consumers at the pump this summer, as these prices are expected to continue to rise."

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