Congress grapples with soaring fuel costs
WASHINGTON — Senators, both Republicans and Democrats, said yesterday that they suspect price gouging as gasoline costs soared in the aftermath of Hurricane Katrina but complained that the government doesn't have the ability to investigate or prevent such market abuses.
"The American people are being victimized more than any free market would warrant," said Sen. Gordon Smith, R-Ore., at Senate hearing on the impact of the hurricane on energy prices.
Smith and other senators said regulators, including the Federal Trade Commission (FTC), are not aggressively pursing price gouging and other market manipulation by energy companies reaping huge profits.
Sen. Pete Domenici, R-N.M., chairman of the Energy and Natural Resources Committee, which held hearings into the recent price spikes, said Congress needs to give agencies the tools to investigate price-gouging complaints. "There are growing concerns that oil companies are making too much in profits at the expense of consumers," he said.
Sen. Jon Corzine, D-N.J., said that even as crude-oil prices were declining, gasoline prices at the pump soared by 25 percent. "There's something not right in how the market is working," he said.
The U.S. average gasoline price slipped yesterday to $3.041 for a gallon of self-serve regular, down from the record of $3.057 a gallon set Monday, according to AAA. Motorists in all but 17 states were paying more than $3 a gallon, on average, for regular gas, the AAA service-station survey found.
In the Seattle area, the average price for a gallon of regular was $2.911 yesterday.
Legislation was introduced that would temporarily suspend the 18.4-cent-per-gallon federal gasoline tax and empower the president to temporarily freeze gas prices at or below levels before Hurricane Katrina struck.
"The president needs to have emergency powers to halt gas-price gouging," said Sen. Maria Cantwell, D-Wash.
Sen. Byron Dorgan, D-N.D., said he will introduce legislation for a windfall-profits tax on oil companies, with the proceeds used to rebate consumers. But he was not optimistic about its prospects.
"Most likely Congress will do little or nothing but talk a great deal and hold hearings," Dorgan said.
The FTC does not have authority over price gouging unless it involves an antitrust or market-monopoly issue.
James Overdahl, chief economist for the Commodity Futures Trading Commission, said the agency is stepping up its oversight of the gasoline futures markets but has not seen evidence of price manipulation related to Hurricane Katrina.
Industry representatives blamed retail price spikes on the disruption of supplies and the anticipation of shortages.
Separately, the Energy Department said it was expanding its hotline for price-gouging complaints to include a toll-free number, 1-800-244-3301.
"We recognize there are some bad actors that may try to take advantage of the situation," said Energy Secretary Samuel Bodman.
Federal officials told the committee they expect prices to begin to decline in the coming weeks and average about $2.60 per gallon later this year and $2.40 for 2006. But they also projected that heating-oil prices would be much higher, averaging 30 percent more than last winter.
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