FTC investigates rising gas prices, reportedly will subpoena oil companies
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WASHINGTON -- The Federal Trade Commission has launched an investigation into whether rising gas prices in the Midwest resulted from price gouging by oil companies, said members of Congress who met with the FTC chairman.
As early as next week, the FTC plans to issue subpoenas to several oil companies, including some suspected of collusion, according to several Illinois congressmen. Their comments followed a meeting late Tuesday afternoon between FTC Chairman Robert Pitofsky and the delegation from Illinois, one of the states hardest hit by recent gas price spikes.
"I think it was a good and thorough update. It confirmed the beliefs of many of us that what we've seen in the Midwest is not just an accident," said Sen. Dick Durbin (D-Illinois)at a news conference following the meeting.
"These price increases are sufficiently questionable and the Federal Trade Commission will now move to a formal phase of investigation," Durbin said.
Durbin added, "If it's a conspiracy case against the oil companies, it's very involved."
Gas prices have soared to well over $2 a gallon in the Chicago and Milwaukee areas in recent weeks. Oil industry executives have blamed the price increases on market conditions, tight supplies, transportation problems and complications in refining newly required cleaner-burning gasoline. They also have strongly criticized suggestions that companies are in collusion or gouging customers.
Durbin said he expected subpoenas to be issued to pipeline companies, refineries and oil company operations on every level, to gather information. A final report by the FTC will be made available in the next two months. Investigators are most interested in agreements that may have led to price increases.
Oil companies could face severe penalties if wrongdoing is found. Any possible criminal activity would be referred to the Justice Department for prosecution, congressional members said.
"I am hopeful that the fact that this investigation is going forward will be a clear signal to the oil companies to bring down their prices immediately so that we can have some relief," said Durbin.
Oil refiners have been invited to talk with the Illinois delegation on Wednesday.
GOP blames White House
Investigators are unsure at what step in the gasoline pricing process collusion may have happened -- if at all."They need to flesh out more details," said Sen. Peter Fitzgerald (R-Illinois).
He added, "It appeared to me [in the meeting] that there was some effort to steer the blame toward the oil companies. Now it well may be that the oil companies are to blame. But I think the administration is concerned that it not be blamed for the high price of gasoline. And that is a political thing that is going on right now."
Vice President Al Gore, the Democratic presidential hopeful, said he wanted a thorough federal investigation into allegations of price fixing and collusion among oil companies.
"I am extremely concerned about the conduct of the oil companies that may have led to these unreasonable price increases," Gore said Tuesday.
The vice president also said he has asked the secretaries of Energy and Environmental Protection to convene a meeting with Midwestern and other governors whose states have been hardest hit by rising gas prices. A meeting with a bipartisan group of governors would help officials consider what steps the federal government could take to help the states hardest hit, Gore said.
Some leading Republicans are trying to blame the price surge on new requirements by the Clinton administration that oil companies provide cleaner burning fuel in areas with severe summer ozone problems.
House Speaker Dennis Hastert (R-Illinois) said the EPA should lift the cleaner fuel requirement in places hit hardest by price increases, such as Chicago and Milwuakee.
"Working people are bearing the brunt of the EPA's inaction," Hastert said.
Rep. Dan Burton (R-Indiana) -- chairman of the House Government Reform Committee and one of the White House's fiercest critics -- has scheduled a hearing for next week on the administration's response to rising gas prices. He has asked Energy Secretary Bill Richardson, Environmental Protection Agency Administrator Carol Browner and FTC chief Pitofksy to testify.
White House spokesman Joe Lockhart rejected the GOP criticism. "That's an argument that just doesn't stand the test of logic," he said. Lockhart also said there is "no legitimate reason" for the high prices.
Indiana suspends gas tax
Indiana's Gov. Frank O'Bannon, a Democrat, on Tuesday suspended the state's sales tax on gasoline for up to 60 days. The move should save motorists between 7 and 10 cents per gallon."Spiraling gas prices have really caused an undue burden on the people of Indiana," O'Bannon said while standing outside a gas station.
The governor said he will monitor gas prices and reinstate the gas tax if prices drop before the 60-day period ends. A 60-day suspension would cost the state $11 million, but the high price of gas has already provided the state with more than enough money to absorb the loss, O'Bannon said.
No relief from OPEC meeting
Another factor that could influence gasoline prices is a meeting of the Organization of Petroleum Exporting Countries set to begin in Vienna on Wednesday.Most analysts agree that the meeting will continue for several days before resulting in some level of production increase. Opinion within OPEC appears divided other whether to add 500,000 or 1 million barrels per day to output.
Neither option is likely to drive gas prices down by much. The smaller increase would mean a rise of about 2 percent in production, and the recent price surges followed OPEC's agreement in March to increase production by 7 percent.
