“The recent spike in gasoline and diesel prices is an unavoidable hardship for our working families, seniors, and farm families.  Rising gas prices mean that families have less money to spend on essential needs, such as clothing and groceries, a factor that hurts our overall economy as well as our individual families,” said Ross.

As the House Committee on Energy and Commerce investigates increased gasoline and diesel prices, Congressman Ross believes the oil company CEOs should testify and participate in committee discussions.  The letter requests Chairman Barton obtain specific documents and information from the six major oil companies, ExxonMobil, BP, Royal Dutch Shell, ChevronTexaco, ConocoPhillips, and Marathon.  These documents will allow the Committee to examine the true extent to which gasoline prices are excessive.

“I represent a large and rural district in the great state of Arkansas.  My district spans 21,000 square miles and 29 counties.  It is not uncommon for my constituents to drive 50 miles or more – each way to and from work.  And in most cases they commute these distances for a job that pays well below the national average.  Hard working Americans are trying to do the right thing by working to put food on the table, to keep the lights on, and to provide for their families – but they are being devastated by these record gas prices.

“An investigation is vital for Congress to further understand the causes of the recent spike in gasoline prices.  Documents must be obtained and testimony must be given from the CEOs of each major oil company to provide a greater understanding of their petroleum pricing policies and refinery capacity,” Ross stated.

Although the Energy Policy Act of 2005, which Ross helped write as a member of the House Energy and Commerce Committee, directs the Federal Trade Commission (FTC) to conduct an investigation into price gouging, there is no definitive timeline mandated by the legislation.  Last September, Ross introduced H.R. 3718, which would have established a timeline for the FTC to conduct an investigation to determine if the price of gasoline had been artificially manipulated. 

-text of letter to Chairman Barton is included below

###

May 17, 2006

The Honorable Joe Barton

Chairman

House Energy & Commerce Committee

2125 Rayburn HOB

Washington, DC 20515

Dear Chairman Barton:

            The Committee has recently initiated an investigation into the causes of rising gasoline prices.  We believe an investigation into this matter is essential.   

We are writing to request that as part of this investigation the Committee immediately schedule a hearing with the chief executive officers of the major oil companies.  As you may know, many members of Congress have been asking for such a hearing since last year. 

We also believe the Committee should examine several key questions.  The Committee should seek to understand the reason for exorbitant retail gasoline prices, the basis for the skyrocketing profits currently being reaped by the oil companies, the companies’ decisions and investment plans regarding refinery capacity, as well as the companies’ supply allocation, reserve level and pricing policies for petroleum products.  We should also examine what role executive compensation plays in gasoline prices and oil company profits.

To answer these questions, there are documents that we believe the Committee should obtain, by subpoena if necessary.  We cannot examine the extent to which gasoline prices are excessive without having access to the oil companies pricing policies and data detailing their wholesale costs and retail prices.  We cannot know whether oil companies have restricted refinery capacity, limited regional reserves, or allocated product to boost profits without having access to internal company discussions.  And we cannot address what role executive compensation may play without having access to documents from the companies’ executive compensation committees.

For this reason, we request that the Committee obtain the following documents and information from the six major oil companies, ExxonMobil, BP, Royal Dutch Shell, ChevronTexaco, ConocoPhillips, and Marathon:

(1)        For the period from August 2005 to the present, a weekly breakdown of gasoline production and delivery costs for each company, including the costs incurred by each company to (a) produce or obtain oil, (b) transport oil to refineries, (3) refine oil into gasoline, (4) transport gasoline to service stations, and (5) dispense gasoline to consumers.

(2)        Internal company communications discussing, recommending, or otherwise relating to how gasoline sold by the company should be priced during three periods with exceptionally high gasoline prices:  April 1, 2004, to September 1, 2004; March 1, 2005, to August 1, 2005; and March 1, 2006, to the present.  These communications should include communications involving the board, the company CEO, and other top officials.

(3)        Internal company communications from January 1, 1995, to the present discussing, recommending, or otherwise relating to reductions or restrictions in refinery capacity, allocation of product among Petroleum Administration for Defense District (PADD) regions, and PADD region reserve levels.  These communications should include communications involving the board, the company CEO, and other top officials. 

(4)        Internal company communications from January 1, 1995, to the present discussing, recommending, or otherwise relating to the level of compensation paid to the company CEO, company board members, and other top officials.  These communications should include any documents reviewed by the executive compensation committee of the board.

Evidence is mounting that the oil industry may be manipulating gasoline prices to boost company profits.  During the September 7, 2005, hearing on Hurricane Katrina and its impact on the energy sector, Rep. Markey introduced a Chevron document from 1995 into the record.  In this Chevron document, the author described how the refining industry would not be able to increase its profits unless it reduced its refining capacity.  Specifically, the document states:

A senior energy analyst at the recent API convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refining margins, pointing out the recent volatility in refining margins over the past 12 months. 

Similar documents from Texaco and Mobil have also come to light.  Perhaps not coincidentally, numerous refineries have been closed since 1995 and refining margins or profits have dramatically increased. 

Gasoline prices have doubled over the last five years, imposing difficult economic burdens on Americans across the nation.  If the Committee is going to be serious about investigating this pressing matter, we must obtain the oil company documents described in this letter and question oil company executives in public hearings under oath.

                                                            Sincerely,