Pelosi, House Democrats to FTC: Investigate Record Gas Prices

Speaker.house.gov ^

[Sub-Driver]

Press Releases Contact: Brendan Daly/Nadeam Elshami 202-226-7616 For Immediate Release 04/25/2008 Pelosi, House Democrats to FTC: Investigate Record Gas Prices

Washington, D.C. – Speaker Nancy Pelosi and House Democratic leaders sent the following letter today to Federal Trade Commission (FTC) Chairman William E. Kovacic urging him to investigate record gas prices. The Energy Independence and Security Act of 2007 gives the FTC the authority to probe possible market manipulation of gas prices, but to date, the Commission has failed to exercise its power to protect consumers from skyrocketing energy costs.

Below is a text of the letter:

April 25, 2008

The Honorable William E. Kovacic

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, DC 20580

Dear Chair Kovacic:

In light of nationwide consumer concern about the record prices for oil and gas at the pump, we urge the Federal Trade Commission (FTC) to immediately initiate a rulemaking to implement the market manipulation authority mandated by Congress in the Energy Independence and Security Act of 2007 (P.L. 110-140). Congress provided this authority to the FTC four months ago -- but to date, the FTC has failed to exercise its power to protect consumers from skyrocketing energy costs. Recent price volatility and investor speculation in the oil market require the diligent oversight Congress called for, especially when oil prices break records daily, hitting $119 per barrel this week.

The Energy Independence and Security Act, which became law last December, directs the FTC to ensure that the U.S. petroleum market is free from price or supply manipulation. Congress gave you the power to levy tough penalties against those who might seek to profit from such illegal activities. Utilized effectively, this new authority will substantially strengthen consumer protections against high energy prices. More importantly, vigorous enforcement will help lower and stabilize prices, increase market transparency, and provide Americans with confidence that retail gasoline and diesel prices are free from the influence of anticompetitive practices and the exercise of market power.

This new authority granted to the FTC is modeled on the anti-manipulation authorities utilized by other agencies such as the Securities and Exchange Commission (SEC) and the Federal Energy Regulatory Commission (FERC). Specifically, Title VIII, Subtitle B of the Energy Independence and Security Act is modeled on section 10(b) of the Securities Exchange Act of 1934 for which a substantial body of case law has been developed over the last half century. In fact, the Supreme Court has compared this body of law to “a judicial oak which has grown from little more than a legislative acorn.” Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 737 (1975).

FTC has acknowledged that oil and gas markets are susceptible to manipulation. In 2006, the FTC’s Congressionally-mandated investigation of gasoline prices after Hurricane Katrina acknowledged the possibility that the petroleum industry can manipulate prices by reducing production, distribution, or inventories or increasing margins.

We need aggressive oversight to ensure such actions are not presently occurring, and to punish them if they are cheating consumers. The FTC must no longer delay action on implementing the mandate from Congress to stop market manipulation as American families and businesses struggle to deal with record gas prices.

Sincerely,

Nancy Pelosi Steny Hoyer

Speaker of the House House Majority Leader

James E. Clyburn Rahm Emanuel

House Majority Whip Chairman, Democratic Caucus

John Dingell Henry Waxman

Chairman, Energy and Chairman, Oversight

Commerce Committee and Government Reform

Edward Markey

Chairman, Select Committee on

Energy Independence and Global Warming

cc: Pamela Jones Harbour, FTC Commissioner

Jon Leibowitz, FTC Commissioner

J. Thomas Rosch, FTC Commissioner

[Wuli]

I say that the FTC should agree to “investigate”

then they should send their investigators to China, India, Vietnam and other places and determine if the rising fuel demand there is real or fictional;

and when they return they can report to Pelostki that the laws of supply and demand are working. (but they should charge her personally for the cost of the investigation)

[SAJ]

The all-time highs in natgas occurred about 3 1/2 months after Katrina in 2005. Enron went bust in November 2001, after an extended bear year in natural gas pricing, although the low prices were certainly not the cause of their collapse.

If you're curious as to the exact prices, you can always find them at Time & Timing. Just take the free trial, login, and use 'The Big Enchilada', T&T's Universal History function.

The contract month to use for this comparison is January. The time period of the year you want to look at is 1 November - 28 December.

[mvpel]

[al_c]

Apple just reported a record 30-something percent profit margin. Does Pelosi want to investigate them too? How about Microsoft?

Earth to Madam Speaker ... gas prices are so darn high because there's too much tax applied to the cost. It's not rocket science.

[xzins]

I’m a pastor in a very poor area in our state.

The gas price is hurting working class families whose hourly income is now buying just 2 to 3 gallons of gasoline when as little as two years ago it was buying 3 to 4.

Other prices have also risen on them.

I guarantee that whichever party comes up with the best answer on this (or most appealing) will win a lot of voters.

I believe we have a fortune of energy in coal, oil shale, offshore oil, etc., but the environmentalists/liberals block access to it. What’s more, the people are looking for a quick answer, and that tendency makes them very susceptible to demagoguery.

[xzins]

Since 2003 world demand has risen only 12% while prices have risen 403%.

[SAJ]

You're referring to 1982-84 when the energy futures contracts opened. Fact is, they pretty well HAD to have futures mkts in energies at that point; the old structure of those mkts -- namely, long-term contracts, buyer's option -- was in shambles. After the debacle in energies during Jimmuh Peanut's regime, producers would only rarely consider commitments of more than a few months, at best.

Users had to have a way to lock in supply and price, which, in the spot and term mkts, they no longer had.

[reagan_fanatic]

By all means, Nancy, let's have an investigation.

An impartial investigation. One that looks closely at how manufacturers are forced by the feds to produce multiple grades of gasoline when one, single grade would be sufficient.

Let's shine the light of publicity on who makes more on a gallon of gas - the oil companies or the federal govenment. Let's also explore the environmental lobby and its successful efforts to block oil exploration and drilling on U.S. territories, which would not only lower gas prices but ease our costly reliance on foreign oil.

Yes, Nancy - let's investigate. Now.

[Domandred]

Pelosi’s “plan” must have been nothing more then investigations

[G.Mason]

Exactly why is it that Iraq is not shipping oil to the US, Austrailia, and Great Briton, by the millions of barrels, as pay back for giving them back their country?

ΜΟΛΩΝ ΛΑΒE

[An Old Man]

"Why don't they just give us all a house, free food, and a govt job, preferably with direct deposit and retirement at 50."

Some people want everything! I know a lot of people who would be satisfied with everything on your list except for the govt job part. /S

[BOBTHENAILER]

Absolutely hilarious cartoon.

[oldbrowser]

It is only beyond comprehension if you ignore RAT history. Practically every friggin' year they investigate, spending MILLIONS of our dollars, "windfall profits" of the O&G industry.

This is tried and true political extortion. Anytime you want to raise campaign contributions you threaten to investigate an industry and soon the lobbyists will show up with pockets full of money and everything is forgotten.

It just a just of doing business.

[MNJohnnie]

Bet on it and listen to all the free marketeers’ explanations

Bet on it since the Summer Gas regulations go off Sept 15th. Maybe instead of sneering, the usual Whienrs should shut up and try actually listening to the people who know what they are talking about for a change.

[Bitsy]

Why don’t they just give us all a house, free food, and a govt job, preferably with direct deposit and retirement at 50.

They are trying their damnest to do that - socialism.

[purpleraine]

The fluctuations of the gas prices based upon political rumor and circumstance are merely speculation and lead to sporadic reactionary increases. For those who say the government has no control, just look around the end of October.

[Son House]

How many times have they done this already?

[thackney]

Another Freeper posted it first.

I grabbed it for my home page.

[Wuli]

“Since 2003 world demand has risen only 12% while prices have risen 403%”

(1) the relationship is not linear

(2) OPEC, NOT Exxon-Mobil, has the only “fixing” ability in the price - it’s production limits

(3) and future - growing demand - is priced into the demand price today (expected future replacement cost of supplies, and contracts on hand today)

what makes “speculation” (futures) such a large part of the current price is that there are a huge number of buyers on the demand side bidding on supplies, contracts and future contracts from a small number of suppliers - they are bidding against each other while trying to assure the supply of a commodity that is totally essential to their economy

as demand continues to increase and supply does not increase or increases at a slower pace, the distance increases between the rate of the simple rise in demand and rate of the rise in price - economics 101

[DennisR]

Nice diversion, Nanc. Quick question for you: What has happened to gas prices since you and the Dims took over both houses of Congress??? Hm???