Rising Gas Prices

RISING GAS PRICES

Mr. WYDEN. Mr. President, I rise to reiterate how important it is that Congress and the administration act to protect the American people from rising gas prices. I call on the Bush administration to stop its campaign of inaction on this critical consumer issue.

This week the Organization of Petroleum Exporting Countries, OPEC, will vote on whether to cut their cartel's production by 1 million barrels a day. This vote comes at a time when the American Automobile Association tells us that the national average price of gasoline is the highest it has ever been. Of course, we know it is not yet the peak driving season. In California, consumers consistently pay over $2 a gallon. In my home State, it is $1.80, and in some towns, $1.85, such as Eugene and Medford. Consumers in Oregon are getting clobbered.

The vote OPEC will be making comes at a time when according to the Associated Press private gasoline inventories are already down by 2.5 million barrels. The vote comes at a time when, in spite of these very low supplies, the Bush administration stubbornly persists in filling the Strategic Petroleum Reserve instead of steps that I and others favor, which are to put more oil on the market.

In my view, it is imperative that the United States push OPEC in every possible way not to cause further harm to our already injured gasoline market and to vote against any further production cuts. The Lundberg Survey tells us that even if OPEC were to agree this week not to cut production, we would still face skyrocketing prices. Here is how I read that: If OPEC doesn't agree not to cut production, the problem will be that much worse.

When oil prices were high in September of 2000, then-candidate George W. Bush blasted former President Clinton for not pushing OPEC to increase production. Prices at that time were not as high as they are today. And at least the administration at that time was making some efforts to wring some relief out of OPEC. But still then Texas Governor Bush said:
We need to be mindful of the power of strong and consistent diplomacy. We need to start playing with chips we have earned in the past on behalf of American consumers.

If anybody has chips to play now in order to get a fair shake for the consumer, it is this President. Certainly he has chips to play with the domestic oil producers who enjoy the tax breaks he favors and environmental breaks and help when those companies are having difficulty supplying their refineries.

With regard to the OPEC vote, we ought to be clear. I hope the President of the United States will follow the advice he gave years ago. I hope he will do everything possible to push those OPEC countries now, telling them they should not allow the gas problem in this country to worsen with yet another production cut. Pushing OPEC to stop a planned production cut is the very least this administration could do for the gasoline consumer. It would be the least that could be done, but at least it would be something. At least it would end the weeks' long, months' long campaign of inaction that this administration has waged as gasoline prices have crept higher and higher and clobbered consumers in every part of the United States.

For several weeks now OPEC's per barrel price has been well above their target per barrel price range of $22 to $28. OPEC committed to keeping prices in this range. They long ago discarded that commitment, and yet nobody has heard anything from the administration until just in the last week or so, as I and others started calling for answers.
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We sure heard from the White House last week when OPEC prices dropped to $35.51 per barrel. They said: Well, we are making progress. But the fact is, that amount is more than $7 higher than the top of OPEC's target price range. So any pressure this administration has put on OPEC is a day late and more than $7 short. Taking credit after the fact for a pittance of accommodation from OPEC is not going to solve this Nation's gasoline price problems, and it certainly is not going to provide the consumer any real relief.

I will tell you what else is not going to help American consumers. That is for the administration to continue to turn a blind eye to the rampant anticompetitive and anticonsumer practices that are plaguing our country's gasoline markets. Scores of communities, including those in my State, have few if any choices for the gasoline consumer. Nationwide the gas market in Oregon and at least 27 other States is considered tight oligopolies where four companies control more than 60 percent of the gasoline at the pump. In these tightly concentrated markets, numerous studies have found oil company practices have driven the independent wholesalers and detailers completely out of the market. They use red lining and zone pricing. The fact is, with these and other practices, the independent stations can't compete. They go out of business, and the oil companies can widen their net to grab even more cash from the consumers.

The Federal Trade Commission, when they have looked at these practices in the past, have admitted that they are anticompetitive and drive prices higher. They just say they don't have the power to do much about it. I don't think that is true. To be fair, the past administration didn't do a whole lot either when it came to going to bat for the consumer to stop these oil company anticompetitive practices. But this administration has proven that if they want to make something happen administratively, they certainly can do it. They have done that in area after area.

It seems to me that if the administration will end its campaign of inaction to stop the price-pumping shenanigans of private oil companies, they could certainly take steps now to help the American consumer.

In December of 2002, they stepped in to stop filling the Strategic Petroleum Reserve to keep more oil on the market, when the oil companies couldn't keep their refineries full. But now when American consumers are paying $2 a gallon at the pump, we don't see any effort to stop filling the Strategic Petroleum Reserve. So the fact is, what this administration is unwilling do for the driving public, they are willing to do for big oil.

What ought to be done in the face of this campaign of inaction? Certainly, you can make a start by having congressional action. I sponsored S. 1737, which would give the Federal Trade Commission additional tools to promote competition in these very tight markets. They would have the power to issue cease and desist orders to prevent companies from gouging consumers. That is a vehicle that can be used right now to help the American consumer. We are certainly going to have problems in the days ahead. And even the oil companies admit that the market won't solve the problems on its own.

Last August a report by the Rand Corporation revealed that even oil industry officials are predicting more price volatility in the future. Last November the Energy Information Administration also issued a report on the causes of last summer's record high gas prices.

They said-and this is the position of the Federal Government-"There is continuing vulnerability to future gasoline price spikes."

The Congress needs to act now before gasoline rises to $3 per gallon, and we are hearing that from some independent oil industry analysts.

The administration, however, has the power to act now. They need to be on the phone. They need to be pushing OPEC today. They need to get off the dime at the Federal Trade Commission, where action can be taken administratively. Rising gas prices don't just hit families in the pocket during the weekly fill-up; those rising gasoline prices are producing a disturbance and causing ripples throughout our economy. There are huge consequences of this price manipulation.

When gasoline costs more, businesses' transportation costs go up. Their profits go down. So either the price of the goods they sell to consumers has to go up, or the number of people they employ must plummet. So higher gas prices either mean bigger costs for consumer goods, or fewer jobs in an economy that certainly cannot afford to lose any more.

Let me close by saying that I hope my legislation, S. 1737, will pass in the days ahead. Right now, consumers are getting socked at the pumps in person. That is not acceptable to me and should not be acceptable to any Member of the Senate. It is time to stand up to the status quo.

It is time for the Bush administration to take the lead. They ought to do it with OPEC and with the Federal Trade Commission. If the administration doesn't support the proposals I offer today, they ought to end their campaign of inaction and offer their own. I hope we will have a chance to debate this on the floor of the Senate.

I yield the floor.