WASHINGTON, D.C.–(ENEWSPF)–May 17, 2011. As the average gas price remains above $4.00 per gallon in Illinois and climbing to nearly $5.00 per gallon in some parts of the state, U.S. Senator Dick Durbin (D-IL) today joined four other Senators in asking the Federal Trade Commission (FTC) to investigate potential price fixing of gasoline by U.S. refiners. Later today, the Senate will vote on a bill that would eliminate tax breaks and subsidies for big oil companies and divert the $21 billion in savings over the next ten years to offset the deficit.
“At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices the idea that refiners may be manipulating the market to keep prices artificially high goes beyond reproach,” the Senators wrote. “It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation. Accordingly, we request that the Commission open a full investigation into these allegations of wrongdoing and to determine the impact this behavior, if confirmed, has on regional and national gasoline prices.”
As Chairman of the subcommittee that oversees the FTC’s budget, the Senate Appropriations Subcommittee on Financial Services and General Government, Durbin has directed FTC to continue investigations of market manipulation and anticompetitive behavior in the oil and natural gas industries and provide Congress with regular reports. While the FTC has complied with this, today’s letter asks the agency to look into specific allegations of price-fixing.
According to Durbin, the average American family pays for higher gas prices three different ways. First, they pay at the pump. Second, they pay as the U.S. government sends their tax dollars back to the big oil companies to subsidize their operations. And third, they pay interest to OPEC nations in the Middle East, from whom we borrow some of the nearly 40 cents of every dollar the federal government spends. So the average family’s children and grandchildren are going to be paying interest on the money the U.S. government borrowed to provide a subsidy of $4 billion per year to the oil companies that are making record breaking profits.
“Big Oil is the one industry that isn’t struggling to make a profit in this challenging economy” Durbin noted. “The five largest oil companies in the country made $33.9 billion in profit between January and March of this year.”
Senators signing on to today’s letter include: Senators Harry Reid (D-NV), Chuck Schumer (D-NY), Patty Murray (D-WA) and Claire McCaskill (D-MO).
[Text of the letter is below]
May 17, 2011
Jon Leibowitz, Chairman
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
Dear Chairman Leibowitz:
We write today to request the Commission begin an investigation into potential price fixing of gasoline by U.S. refiners. Recent reports have indicated that U.S. refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line. If true, this behavior is a direct affront to the American people who are still struggling with the economic downturn. It is currently within the Federal Trade Commission’s (Commission) authority to review these allegations for any potential wrongdoing and to determine the impact these actions may have on gasoline prices both regionally and throughout the country.
The rise in the price of oil is certainly a driving factor behind the recent rise in gasoline prices, but concerns have been raised that while gasoline use is declining, U.S. gasoline inventories remain below average and refining margins continue to rise. According to information posted by the Energy Information Administration U.S. refiners are using only 81.7 percent of their capacity, a decline of 7 percent from the same time last year. Moreover, since the beginning of 2011 U.S. refiners have seen over a ninety percent increase in their refining margins. While some have argued that this increase is due to potential impacts from recent flooding along the Mississippi River, this cannot justify the steady increases in their margins since January of this year.
At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices the idea that refiners may be manipulating the market to keep prices artificially high goes beyond reproach. It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation. Accordingly, we request that the Commission open a full investigation into these allegations of wrongdoing and to determine the impact this behavior, if confirmed, has on regional and national gasoline prices.
Thank you for your consideration of our request. Should you have any questions about please feel free to contact Nichole Distefano in Senator McCaskill’s office at 202-224-6154. We look forward to hearing from you.