Wyden to Energy Conferees: Attack Gas Price Hikes in
Energy Bill
Conference report needs “concrete” initiatives to help consumers

September 11, 2003

Washington, DC – U.S. Senator Ron Wyden (D-Ore.) today challenged his fellow conferees on the energy bill to adopt a concrete package of initiatives to help consumers at the nation's gas pumps by increasing competition in gasoline markets. In recent weeks, Oregonians have paid record-high prices for gasoline – in some cases, more than 50 cents more per gallon than they paid one year ago. On the Senate floor today, Wyden offered the members of the Senate-House conference committee negotiating a final energy bill a plan to keep oil companies from using tight controls on many markets to gouge Oregon drivers at the pump.

“Artificially inflated gas prices cut Oregon families three ways: they steal dollars from their pocketbooks, slow down job creation by reducing discretionary spending on other goods and services, and raise the price of the goods families need to buy through increased transport costs,” said Wyden. “With my proposal, Congress has the opportunity in this energy conference to say, no more, to the oil and gasoline companies who gouge American consumers.”

Included in Wyden’s recommendation to the conferees:
• Directing government regulators to act against documented anti-competitive practices that currently siphon competition out of the gasoline markets

• Designating so-called “concentrated markets,” where four or fewer gasoline companies control more than 60 percent of gasoline supplies, as “consumer watch zones.” In those zones, the burden of proof would shift to oil companies to show that anti-competitive practices like redlining and zone pricing (see below) are not hurting consumers. Also in the zones, the Federal Trade Commission (FTC) could issue “cease and desist” orders to companies engaging in such anti-competitive practices.

• Taking steps to keep supplies available in emergencies. Major oil companies could be required to maintain minimum inventories to address unexpected supply crunches, or the Federal government could create a “strategic gasoline reserve” to provide supplies during emergency refinery or pipeline shutdowns. This approach would build on the strategic reserves that already exist for petroleum and heating oil supplies.

In recent years, Wyden investigations have uncovered numerous anti-competitive practices in Northwest gasoline markets, including redlining, where companies seek to keep independent wholesalers from competing in markets by refusing to let independent dealers buy better-priced gasoline from those local jobbers. In Oregon, Wyden also uncovered zone pricing, where companies charged different prices for the same gas at their own branded stores in adjacent neighborhoods, pricing it as high as the market will bear. They also charged independent dealers higher wholesale prices than they charge their own branded stations.

“I have spent years documenting unethical and anti-competitive practices in this country’s gasoline markets – practices that have driven prices up and cost consumers far too much,” said Wyden. “With job growth stagnant in Oregon and across the nation, it’s time Congress acted to protect people from this kind of oil company price gouging.”

In addition to his plan to combat gasoline market manipulation, Wyden urged conferees to reject the argument that drilling in the Arctic National Wildlife Refuge will address the nation’s energy problems. U.S. refineries are typically running at or above 95 percent of capacity. If more oil was produced in Alaska, U.S. refineries would not be able to refine the extra oil into gasoline. The oil companies could export Arctic oil overseas and reap higher profits, but it would do nothing to provide relief for U.S. consumers at the pump.

 

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