Key US Dems To Examine Impact Of OPEC, Mergers On Pump Price
>>>Oh! Oh!! Here come Hillary, Chuck Schumer, Conyers et al, posturing for '08 and threatening to break up big oil, ban mergers, investigate gouging etc. I would like to introduce you folks to Mr. Depletion over here. You just don't get it. I am reminded that John D. Rockefeller was slightly amused when Standard Oil was broken up and his wealth tripled because nobody really understood how valuable the little pieces had grown over time. Like I always say, watch the politicians and fly below the radar. They are actually starting to sound a little like Hugo.<<<
DOW JONES NEWSWIRES
May 9, 2007 6:27 p.m.
By Maya Jackson Randall and Ian Talley
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--A day after touting plans to crack down on gasoline price gouging, key U.S. lawmakers Wednesday said they want to also examine whether the Organization of Petroleum Exporting Countries, oil-industry mergers and a lack of refining capacity are behind soaring gasoline prices.
Rep. John Conyers, D-Mich., head of the House Judiciary Committee, has scheduled a hearing Tuesday to consider whether new policies are needed to ensure that oil industry mergers aren't leading to unfair energy prices.
The senior Michigan Democrat, in a press briefing, voiced concern that in some regions of the country, a few refineries control a majority of sales, leading to an oligopoly.
"With this type of market structure, each individual refinery can limit capacity and drive up prices," he said. "In this type of marketplace, with these stakes, we need an administration that is going to have an active, vigorous merger enforcement policy."
Turning his attention to OPEC, Conyers said it is time to do something about the group's control over the global oil market.
"We have long decried OPEC, but, sadly, no one in government has yet tried to take any action. This must change," he said.
The committee's antitrust task force will also consider whether current gasoline prices are a result of oil companies refusing to invest in new refining capacity, said Conyers.
Democrats Call For Restructuring
The congressional investigations into the oil industry come just as the national average retail price of regular gasoline has jumped 8.3 cents to $3.054 a gallon - its second-highest level ever.
Many lawmakers, while on the campaign trail last year, pledged to work on new energy policies that could help ease consumer frustration at the pump.
Now, as prices soar across the country, they're under pressure to prove they are keeping their promises.
Senate Democrats are also gunning for big oil, as party leaders promised they would in the early hours of their congressional victory late last year.
Sen. Charles Schumer, D-N.Y., chairman of the Joint Economic Committee, said he wants to start by restructuring the oil industry.
"We're going to look at whether we should break up big oil," Schumer said at a photo op at a Capitol Hill Exxon Mobil Corp. (XOM) gas station. "We're going to go after them...and the oil companies better watch out."
The New York Democrat said the panel would also examine whether large oil companies' low refinery capacity utilization rates, alleged under-funding of maintenance and lack of capacity expansion, are partly to blame for high prices.
Refinery capacity utilization rates in the first months of the year were lower than they have historically been for years, but they have rebounded to more normal levels as plants return from planned and unplanned maintenance ahead of the summer driving season.
Vermont Independent Sen. Bernard Sanders backed Schumer's idea.
"It is time to impose an immediate moratorium on big oil company mergers and give serious consideration to breaking up some of the biggest oil companies in this country," including Exxon Mobil, ConocoPhillips (COP) and Chevron Corp. (CVX).
Additionally, Sen. Byron Dorgan, D-N.D., said lawmakers are also planning to investigate spot-market pricing for crude and oil products.
And Sen. Hilary Clinton, D-N.Y., has asked the Senate energy policy panel to inquire about price gouging and the cause of refinery shutdowns during a hearing on summer energy prices next Tuesday.
Critics Blame Tight Market
Still, Republican lawmakers have argued that the way to address high gasoline prices is to streamline permits to build new refineries and to reduce the number of blends of gasoline that are used across the country - not through price-gouging legislation and oil-industry restructuring.
Meanwhile, the oil industry says it is steadily reinvesting profits into new technologies that are helping to produce more gasoline from crude.
Industry officials also object to anti-gouging legislation, saying that federal and state investigations have proven no wrongdoing in the industry.
Testifying Wednesday on Capitol Hill, American Petroleum Institute Chief Economist John Felmy said gasoline prices are high due to high crude oil prices, strong demand for gasoline and a sharp decline in imports.
"There is a fragile balance between the world's supply and demand for crude oil," he told a House panel. "Because of this tight market, any disruption of oil supply - or even the threat of a disruption - can push prices upward as buyers and sellers in the worldwide marketplace look to secure supplies for their customers."
Felmy added that the oil industry is making major investments in refining technology and "squeezing out more gasoline and diesel fuel from a barrel of crude oil this year compared to past years."
Around 2 million barrels of capacity expansion - representing 16 different projects - have been announced as planned or possible to come on line by 2011.
Still, Democrats appear determined to move new legislation that would require the Federal Trade Commission to investigate the market and punish companies found to have gouged consumers.
Rep. Bart Stupak, D-Mich., chairman of the House Energy and Commerce Committee's oversight and investigations subcommittee, announced plans to hold a hearing May 22 to consider the cause of rising gasoline prices. The Michigan Democrat said he would invite oil company executives, although he doesn't expect them to show up. He added that the witness list hasn't been finalized.
Meanwhile, he's aiming to quickly move through the committee a bill he authored that would crack down on gasoline price gouging.
Action on his bill would mirrorefforts by Sen. Maria Cantwell, D-Wash. The Senate Commerce Committee on Tuesday passed a fuel-efficiency bill that included Cantwell's price-gouging amendment.
"Because there is no federal definition of gas-price gouging, the Federal Trade Commission has never brought a case of gas-price gouging to court," Stupak said.
He said he's not expecting the bill to be included in a major energy bill the House is expected to consider this summer. Instead, he would like to push the anti-gouging bill forward separately, with an eye toward tacking it on to some other legislation.
"This bill has momentum. This bill can move," he said. "So why would I want to tie it in to other legislation that's not going to be moving very quickly?" |
