SUBCOMMITTEE REVIEWS GAS PRICING, FRAUD, AND ECONOMIC IMPACT OF STORM ON MANUFACTURING, TRAVEL &TOURISM, AND TRADE

Washington, Sep 22, 2005 - "Hurricanes Katrina and Rita demonstrate the massive destructive power of nature and the uncertainty over what region is struck," said Rep. Cliff Stearns (R-FL), Chairman of the Commerce, Trade & Consumer Protection Subcommittee.  "We need to understand better the long-term consequences of economic disruptions resulting from these catastrophes.  In addition, we are looking at how consumers fair during times of disaster -- what is the level of price gouging, collusion, and other anti-competitive practices - and how to deter those instances."

Stearns closely questioned John H. Seesel of the Federal Trade Commission (FTC) on consumer abuses and how to combat them.  In addition to outlining the FTC's efforts against fraud, deception, and anticompetitive practices, Seesel described the agency's program to monitor gasoline prices.  He testified, "If the FTC staff detects unusual price movements in an area, it researches the possible causes.  The staff investigates unusual price movements that do not appear to be explained by business-related causes to determine whether anticompetitive conduct may underlie the pricing anomaly."   However, when asked by Chairman Stearns if he felt that the FTC should have explicit authority to regulate price gouging, Seesel answered no.

David Huether, Chief Economist with the National Association of Manufacturers, presented the storm's impact on manufacturing.  Huether stated, "Based on preliminary analysis, the extent of damage to residential and business capital stock totaled $71 billion.  Hurricane Katrina is expected to slow economic growth by more than a percentage point to 3.2 percent growth in the third quarter."  Roger Dow, President of the Travel Industry Association of America, noted that "with the total absence of leisure, business and convention travel to the region, approximately $50 million in travel-related spending is now lost every day."

"Katrina severely damaged the regional economy, and its impact will be felt in the national economy.  The disaster also gave countless opportunities for fraud, collusion, and price gouging.  I will continue to work with the FTC to ensure that it has the tools to detect these unfair practices and to punish them," concluded Stearns.