Gasoline

GASOLINE

Mr. WYDEN. Mr. President, I take a few minutes tonight to talk about the issue of gasoline prices. I serve on the House-Senate conference committee which is now negotiating over how to pass a good and hopefully bipartisan Energy bill. I will talk about an issue that is clobbering consumers all across this country. It has been devastating across the West—in Oregon, in Washington, Idaho, and California. The fact is, this is true all over America.

In Los Angeles, the average price for regular unleaded gas is $2.10 a gallon. In New York City, the average price is $1.95 for a gallon of gas. In Phoenix, it is $2. At present, gasoline costs 30 cents more than it did at this very time last year, and 15 cents of that increase has happened in the last few months. In my home State, Oregon drivers are paying a whooping 56 cents more per gallon than they paid for the same gas in September of last year.

I don't think anyone is confused about the implications of these skyrocketing increases. When Americans have to spend this additional money on gasoline, they do not have money for other essentials at a time when millions of our families are hurting. They cannot buy those back-to-school clothes and groceries and consumer items when they are paying an extra 50 cents for gas all across the West and in numerous communities across the country.

It seems to me with so many people hurting, with so many folks out of work, the efforts of the conferees with respect to protecting the American people from escalating gasoline prices seems to be especially important.

Artificially inflated gasoline prices shellac our families three ways: It takes dollars from their pocketbooks; it slows job creation; and it often raises the prices of the goods families need to buy due to increased transportation costs.

When I was home this summer and I held town meetings across Oregon, from Elgin in the rural part of our State to the metropolitan areas of Portland, I heard again and again: What steps is the Congress going to take to promote competition, use free-market principles to help put in place policies that will promote competition in the gasoline markets and provide relief for our consumers?

These gasoline price spikes and the escalating cost of gas cannot be explained just by the market. Steps ought to be taken to put in place real procompetitive market-oriented policies to provide relief for our consumers.

The Secretary of Energy said recently that he is conducting what amounts to an informal investigation into this issue. But we have examined the law and the Department of Energy does not have any power to do anything about gasoline prices.
The Federal Trade Commission, which we thought could play the role of being on the side of the consumer, says they can only prosecute if they find out-and-out, blatant collusion, setting out a standard that is virtually impossible to prove in the real world. Moreover, the Federal Trade Commission does not seem to think that tightly documented cases of anticompetitive practices such as redlining and zone pricing is a particularly big deal.

I come to the Senate tonight because the American people deserve better and the American people have a right to insist in this House-Senate energy conference going forward now, that steps are taken to actually put in place new policies to put the Government on the side of marketplace-oriented procompetitive policies that will provide relief for the American consumer who fills the tank at pumps across the country and is just getting shellacked right now when they try to afford those bills.

Even the oil companies admit that the market is not going to solve the problem by itself. Last month, a report by the Rand Corporation revealed that even industry officials are predicting a great deal of price volatility in the future. If you look at what the industry is saying—and that is the assessment of people within the energy industry, not critics—even people within the energy industry are saying, for all practical purposes, consumers can expect more frequent and larger price spikes in the next few years.

I am proposing, and I have shared it with members of the conference, both Democrats and Republicans, and I intend to do so in the days ahead, a proposal so the energy conference does not wrap up without a concrete package of procompetitive initiatives to help consumers at the Nation's gas pumps.

It seems to me the focus of such a procompetitive package should be for the energy conferees to direct Government regulators to act to eliminate anticompetitive practices that right now are siphoning the competition out of our gasoline markets.

Specifically, what we have found is that in my home State, and at least 27 other States, there are essentially oligopolies, mini kinds of monopolies, where just a handful of companies—maybe three or so, maybe four, but a tiny number of
companies—are controlling more than 60 percent of the gasoline supply.

That is the case in my home State. It is all over the West, where four of the top six States for high gas prices are located. So, in effect, what you have is more than half of our States very highly concentrated as gasoline markets, where, in effect, you have seen the competitive juices drained out of the gasoline business. It is those competitive juices that I want to restore.

What happens in these tightly concentrated markets—there have been numerous studies to this effect—is that you end up losing a lot of the big sources of competition and price restraint. I am talking specifically about the independent wholesalers and dealers, and we are losing them from these concentrated markets.

One way that has taken a huge toll on the consumer is that these markets often get redlined. In effect, when a market is redlined, you have the independent distributor restricted in terms of where they can sell their gas. As a result, the independent stations have to buy their gasoline directly from those large companies, usually at a higher price than the company's own brandname stations pay. With these higher costs, the independent stations cannot compete.

In my home State, we have lost hundreds of gasoline stations in the last few years. We know many of them are the independent stations that are the biggest source of competition that is so beneficial to the consumer.

So it seems to me, at a minimum, the Federal Trade Commission should act to promote competition in these areas, these 27 States, for example, that have these quasi-monopolies. I believe these highly concentrated markets ought to be designated "consumer watch zones," where there would be greater monitoring by the Federal Trade Commission, and where the Federal Trade Commission would be empowered to issue cease and desist orders to prevent companies from gouging consumers.

I also think that in these particular areas, where you have quasi-monopolies, the Congress ought to stipulate that redlining and zone pricing are anticompetitive practices by their very nature, and that companies that engage in redlining and zone pricing in these tightly concentrated markets should have to carry the burden of proof that what they are doing in those concentrated markets doesn't hurt the consumer.

In the past—and, as I say, I have shared these proposals with Senators of both parties; I have offered ideas to promote competition in the gasoline industry—there have been some who have said, and vociferously, that these kinds of proposals are unacceptable; somehow they would create disincentives to production—this sort of thing.

Well, I see absolutely nothing here that creates a disincentive to production. What I want to do is promote competition and freer markets for consumers at the gas pump.

What I would say to those in the Congress who disagree with the procompetitive proposals I am making today is that I want to issue you a challenge. To those who think the approach I am offering up today is unwise, I would say: Bring your own proposal, give your own proposal to the conferees on the House-Senate committee that is meeting now with your ideas on how to promote competition in the gasoline market.

I want people to know I have offered a proposal to colleagues to both parties in the conference, but I would like to hear from others who have ideas if they happen to agree that my approach is not the way to go—unless someone is prepared to say there is no problem for the consumer. I defy somebody to say that to people I am hearing from in the West and all over the country, who are paying $2 a gallon for gas.

Unless you are prepared to tell those people there is no problem out there, I believe those who disagree with the proposals
I am discussing today to promote competition ought to come forward and put their own ideas on the table.

There are a couple of other points I want to make with respect to this proposal to promote competition in gasoline markets.

I see my good friend from Virginia here, who wants to address the Senate. I will just wrap up with a couple of additional points.

I also believe, Mr. President, and colleagues, that as part of the energy conference, the Congress needs to address the growing gap between consumer demand for gasoline and what the oil companies can produce. When supplies are tight, and there is no spare gasoline in inventories, consumers are especially vulnerable to supply shortages and price spikes when refineries shut down unexpectedly or a pipeline breaks, as happened this summer.

Congress ought to take steps to ensure that the consumer is not left stalled by the side of the road or fuming at the pump, by taking steps to keep supplies available in emergencies. It seems to me that here, at a very minimum, steps ought to be taken to ensure there are inventories on hand to address unexpected supply crunches. That has been done in other areas.
Certainly we have a Strategic Petroleum Reserve for petroleum and heating oil supplies. I think, given the shellacking consumers are taking with respect to gasoline prices, steps ought to be taken by the Congress conferees to ensure that adequate inventories are on hand to address unexpected supply crunches and the hikes that so often accompany them.

Finally, I hope, as the conferees move to complete their business, they look at what is on the record today with respect to anticompetitive practices in our gasoline markets. These are practices that have driven prices up and have driven consumers crazy at the pump. The evidence is very real.

The fact is, the investigation, as the Department of Energy describes it, is toothless. They do not have the authority under current law to stand up for the consumer at the pump. The Federal Trade Commission, for reasons that are beyond my comprehension, refuses to deal with the documented cases of redlining and zone pricing and anticompetitive practices.

So I have come to the floor today, Mr. President, and colleagues, to outline specific steps, specific actions that could to be taken on a bipartisan basis by the energy conferees to provide real and concrete relief to energy consumers at the pump.

In this conference, the Congress has the opportunity to say that when our consumers are facing, as I described, price hikes of 50 cents—50 cents—for gas, the Government is going to be on their side with policies that promote competition in gasoline markets, in particularly those 27 States which are, in effect, mini monopolies, where there are just a handful of choices for consumers and prices go up as a result.

I call on the Congress to take up this cause in this House-Senate energy conference. This is a chance to go to bat for consumers on the issue that is frustrating our consumers and our small businesses every single day. They are looking for the Congress to step up and act to provide some real relief. The people of this country are asking for that kind of advocacy. I believe it is time for the Congress to provide that kind of approach.

With that, I yield the floor.