Mr. President, I appreciate this opportunity to speak about S. 1610, a bill requiring the Federal Trade Commission to conduct an inquiry into the retail price of gasoline. I thank my colleagues,…
Mr. President, I appreciate this opportunity to speak about S. 1610, a bill requiring the Federal Trade Commission to conduct an inquiry into the retail price of gasoline. I thank my colleagues, Senators Frist and Harry Reid, for their leadership and Senators Landrieu and Vitter and so many others for their efforts in working through this time of unprecedented destruction and human suffering.
I am here today to lend my support for giving U.S. gasoline consumers a more thorough understanding of the pricing mechanisms that are at play at the pump. The legislation I propose calls for the Federal Trade Commission to conduct an immediate study into whether rising gas prices are the result of a struggling market or whether market manipulation or a form of gouging is taking place during this time of tragedy.
Even before Hurricane Katrina, the Consumer Federation of America cited several reasons for the dramatic increase in gasoline prices, including tight crude oil inventories, inadequate oil refinery capacity, lack of competition and the oil industry's increasing market power. These are all plausible reasons for price spikes, but they are not enough to stop the questions of people concerned with their tighter budgets.
Between Nebraska and Iowa, more than 500 complaints have been made to State officials about high prices. Officials in both States indicate they have seen no evidence of market manipulation by retailers. Retailers are not singled out as the focus of this bill.
My bill calls for a 2-week study on the root of rising gasoline prices, including both regular gasoline and ethanol-blended gasoline. The report would then be forwarded to Congress for further action. If the report determines no market manipulation is occurring, the FTC would notify the U.S. Secretary of Energy, who would use the information to determine whether the Federal petroleum reserve would need to be tapped for additional oil.
But if manipulation is found, we will have the opportunity to act quickly.
The FTC would work with the attorneys general of various affected States to take appropriate action.
I am aware that inquiries as these have been conducted in the past, particularly around this time of year. Price surges around the time of the Labor Day holiday are common. As the prices fall, interest in determining why they reached record level diminishes. I hope this can be different. Even if prices begin to fall, which it appears they may, we still need to know what happened and why it happened.
Oil, as we all know, is the most widely used source of energy in the world. Facts indicate that world production of oil will start to decline. However, demand will not. At what point the production of oil will fall below demand cannot be accurately determined, but I believe that recent events that have disrupted normal supply and demand behavior is an illustration of what consumers can expect once that day arrives.
This is why, after years of delay, it was so important that we were able to pass an energy bill, allowing for the development of more energy sources. I am hopeful that these energy sources, particularly renewable fuels made from farm commodities, will be developed quickly enough to prevent price surges at times the oil supply or refinery capacity is disrupted.
According to the American Petroleum Institute, Nebraska has the distinct honor of being the only State west of Arkansas to see prices jump more than 50 cents per gallon since August 30. Why Nebraska? Let's find out.
In many cases, we saw pump price increases of 20, 30, 40 cents and even higher in a single day. Why such a dramatic increase? Let's find out.
We know there exists a very healthy competition between gasoline retailers, yet the price range for the same grade of gasoline yesterday was $3.19 in Lincoln, Nebraska and $2.99 in nearby Fremont. Why the difference? Let's find out.
What role do speculators play in establishing price? Let's find out.
These questions, and others, are important. Every part of our Nation's economy is impacted by these increases.
For example, the extraordinary prices of gasoline, diesel fuel, natural gas and petroleum derived input products such as fertilizer, chemicals and propane add another economic burden, particularly in rural areas and for farmers and ranchers who count on a ready and accessible energy supply for the production and harvest of their crops and livestock.
We need stable and reasonable gasoline, diesel, and natural gas prices to operate farm machinery, dry grain, and transport commodities to market, especially during the coming harvest season. The extreme volatility of world crude oil and petroleum product prices, according to USDA, has already impacted net farm income by over $2 billion.
When we take a hard look at the facts, we will better understand the forces affecting prices at the pump. We'll understand why in Nebraska we pay prices that range from $2.89 to $3.61 and higher. We'll understand reports of $6.00 gasoline in Atlanta and even higher prices at home and abroad. This legislation is nothing but beneficial for American gasoline consumers.
Now, I ask my colleagues to join me in promoting legislation that will provide valuable information on our Nation and the world's transportation fuels.
