FTC Opens Gas Price Investigation
By H. JOSEF HEBERT
.c The Associated Press
WASHINGTON (June 20) - The Federal Trade Commission has opened a formal investigation into soaring gasoline prices in some areas of the Midwest and will begin issuing subpoenas to oil companies by the end of the week, congressional sources said Tuesday.
FTC Chairman Robert Pitofsky told some members of the Illinois congressional delegation that the sudden price spikes in the Chicago and Milwaukee areas and elsewhere are ''sufficiently questionable'' to warrant a formal investigation into possible price gouging and collusion, according to one lawmaker present.
''The fact that they're moving forward with this investigation will be a clear signal to the oil companies to bring down prices immediately,'' said Sen. Richard Durbin, D-Ill., who was among those who met with Pitofsky on Capitol Hill.
At the request of the Clinton administration, the FTC has been conducting for the past week an informal inquiry into steep gasoline price increases in the Midwest. But until now the agency's actions amounted to informal fact-finding, with no threat of subpoenas or requirement for companies to cooperate.
Durbin said Pitofsky told him and other Illinois lawmakers that now the agency will pursue a formal investigation and begin issuing subpoenas to companies connected with the refining, distribution and sale of gasoline by the end of the week.
On Monday, Vice President AL Gore, citing reports of huge profits by the oil companies this year, said the FTC should broaden its inquiry beyond the Midwest. Indications were, however, that the agency at least initially was confining its investigation into the Chicago-Milwaukee corridor, where prices have soared well beyond $2 a gallon in a matter of weeks.
Pitofsky was unavailable for comment. The FTC offices were closed for the day.
The White House, trying to stem political fallout in pivotal Midwest states, had foreshadowed an investigation earlier Tuesday. It said industry arguments blaming new environmental rules for the soaring prices ''doesn't stand the test of logic'' and that more investigation of oil company practices was needed.
At the same time, the administration was quietly trying to persuade OPEC oil ministers to increase crude oil production when they meet Wednesday in Vienna, Austria. It's widely believed some production increases will be approved, but the additional oil may do little to drive down gasoline prices that have reached as high as $2.33 a gallon for regular grade in Chicago.
The Energy Department's weekly survey showed the cost of gasoline nationally increased 5 cents a gallon from last week to $1.68, a record high for the fourth week in a row. And the high prices were prompting worries both on the presidential campaign trail and among Democratic lawmakers on Capitol Hill.
''There is gouging on the part of the large oil companies,'' insisted Senate Democratic Leader Tom Daschle of South Dakota. He and Rep. Richard Gephardt of Missouri, the top Democrat in the House, met with President Clinton last week to emphasize ''the seriousness of the matter,'' Daschle said.
The two leading Democrats reportedly raised concerns that if gasoline prices are not reined in, it could mean trouble for both Al Gore's presidential bid and for Democratic efforts to regain control of the House in November. States such as Illinois, Wisconsin and Michigan, where gas prices have eclipsed $2 a gallon, are pivotal states in the election.
Republicans have lost no time in trying to tar the administration, the Environmental Protection Agency and Energy Secretary Bill Richardson - already under attack because of security problems at the Los Alamos nuclear weapons lab - for the gasoline price surge.
''This is the kind of thing people get made about and they want action,'' said Senate Majority Leader Trent Lott, R-Miss.
House Speaker J. Dennis Hastert, R-Ill., said the EPA, in areas hit by major price increases such as Chicago and Milwaukee, should lift its requirement that they use cleaner gasoline. ''Working families are bearing the brunt of the EPA's inaction,'' declared Hastert.
White House press secretary Joe Lockhart said there is ''no legitimate reason'' for the high gasoline prices and rejected suggestions that the EPA's requirement for cleaner fuel in areas with severe summer ozone problem is to blame.
''That's an argument that just doesn't stand the test of logic,'' Lockhart insisted. The EPA has said the cleaner gasoline should have added 3 to 8 cents to the cost of a gallon of fuel. Since the oil companies have known of the new requirements for more than a year, they should have been prepared, the EPA said.
The Federal Trade Commission, at the administration's request, has begun an informal inquiry into whether there has been illegal price gouging and collusion.
On Monday, Gore cited huge profits by oil companies this year and called for expanding the investigation beyond the Midwest. On Tuesday, Gore suggested his call already may have had an impact, saying, ''Some prices came down today by several cents.''
Texas Gov. George W. Bush, a former oil man now running for president, stepped carefully around the price gouging issue, saying, ''I think it's important to find out whether it's true or not. I'd like to know all of the facts.''
Richardson said the price differential between conventional gasoline and the cleaner burning fuel - about a third of the gasoline sold - has no justification.
''The oil companies, the refining companies need to explain ... why prices are so high ... when (the cleaner gas) costs a few pennies to produce,'' he said. |
