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Washington, D.C. - Congressman Maurice Hinchey (D-NY) today praised the Federal Trade Commission's (FTC) announcement that it is investigating whether oil companies have engaged in gas price fixing and market manipulation in the wake of Hurricane Katrina. The FTC's investigation comes less than two weeks after Hinchey led a group of 94 House members calling for FTC and U.S. Department of Justice (DOJ) probes into price gouging by the oil industry.
"I am very pleased that the FTC has responded to our request for immediate investigations into gas price gouging and anti-trust violations by the oil industry," Hinchey said. "In the wake of Hurricane Katrina, we've seen extraordinary acts of heroism and kindness by Americans from coast to coast, but we've also seen greedy oil companies use the devastating storm as an excuse to bilk the public for every penny they can get out of them at the pump. These price fixing practices are outrageous and they must be stopped."
Current federal law does not specifically govern price gouging, leaving it up to individual states, which often only institute such laws during times of emergency within a particular state. However, the Federal Trade Commission Act bans unfair and deceptive trade practices, including industry collusion and price fixing, which is why Hinchey and his colleagues believed they had legitimate grounds when calling for the FTC and DOJ investigation.
According to a University of Wisconsin-Madison study released last week, the price of gasoline should not cost the roughly $3 per gallon it costs today. The study notes that if crude oil were to cost $95 per barrel, and refining and distribution were to cost 43 cents and taxes were 42 cents, a gallon of gasoline would be expected to cost about $3. However, the price of crude oil today costs roughly $67.50, meaning that a gallon of gasoline should only cost approximately $2.38, not $3. Hinchey noted that this serves as further proof that the oil companies are using Hurricane Katrina as a scheme to artificially raise prices excessively.
"It is shameful that Americans across the country are forced to look under their couches for spare change to pay for gas, while oil company executives are enjoying record level profits at their expense," Hinchey said. "The fact that the FTC has finally responded to our request in the House, as well as requests by others, and is now investigating gas price gouging is a very important step in the right direction. I will remain vigilant and carefully monitor the FTC's investigation to ensure that they hold the oil companies responsible if they find criminal behavior."
Although gas prices have gone down somewhat, Hinchey is still pushing for his Hurricane Katrina Emergency Temporary Energy Price Freeze Act of 2005, which would provide the president with the authority to freeze gas prices at or below the level they were prior to the devastating storm. The price cap on gasoline and other petroleum products would stay in effect until the domestic supply of petroleum meets or exceeds the level of domestic supply experienced before the hurricane.
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