Governors Ask Feds To Investigate Possible Gas Price Gouging
Executives Think Oil Companies May Be Padding Profits

POSTED: 12:04 pm EDT September 21, 2005

MADISON, Wis. -- Eight Democratic governors want President George W. Bush and Congress to investigate possible gasoline price-gouging after Hurricane Katrina.

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Sep 21, 2005 — By Tom Doggett

WASHINGTON (Reuters) - The Federal Trade Commission is investigating whether gasoline price profiteering has occurred and if oil companies have constrained refinery capacity to manipulate fuel prices, an agency official said Wednesday.

"A determination that unlawful conduct has occurred will result in aggressive law enforcement activity by the FTC," John Seesel, an FTC associate general counsel, told a Senate Commerce Committee hearing.


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The FTC is responding to language in recently passed energy legislation that requires the agency to probe whether gasoline prices have been manipulated by attempts to reduce refining capacity, Seesel said.

U.S. oil companies have adamantly denied that they have acted to constrain gasoline or crude oil supplies.

The FTC is keeping an eye on gasoline prices, even though they have fallen from their record $3.07 per gallon national average price seen when Hurricane Katrina hit the Gulf Coast, Seesel said.

"The commission is very conscious of the swift and severe price spikes that occurred immediately before and after Katrina made landfall," Seesel said.

Four major oil refineries remain shut and a large chunk of oil production in the Gulf of Mexico is still offline due to damage from Hurricane Katrina which slammed into Louisiana and Mississippi three weeks ago.

And now with the approach of Hurricane Rita, which has strengthened into a Category 4 storm, oil and gas companies have evacuated thousands of their workers from oil rigs and production platforms in the Gulf. Some refineries are starting to shut down, and Houston's mayor called for an evacuation of low-lying, flood-prone areas of his city.

Separately, the Government Accountability Office said recent retail gasoline prices have risen faster than crude oil prices.

This goes against the historical trend when major crude oil price swings are generally mirrored by gasoline prices, said Jim Wells, GAO director of natural resources and environment.


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In a letter, they say they're concerned about "excessive profits being made by oil companies who are taking advantage of this national crisis."

The letter is signed by the governors of Oregon, Wisconsin, Michigan, Illinois, New Mexico, Iowa, Montana and Washington.

The letter cites a study by a University of Wisconsin economist who found the hurricane was not entirely to blame for high prices at the pump.

Bush has asked Attorney General Alberto Gonzales to handle any price-gouging allegations.

Last week, the Senate passed legislation requiring the Federal Trade Commission to investigate price-gouging accusations.

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FTC nominees on hold
By Lauren Shepherd

The White House could recess-appoint two controversial Federal Trade Commission (FTC) nominees if two Democratic senators do not release their holds on one of them — the GOP selection to head the commission.

Sens. Barbara Boxer (D-Calif.) and Ron Wyden (D-Oregon) have placed a hold on Deborah Majoras’s confirmation as the FTC chairwoman, citing concerns that her former job as a partner at the Jones Day law firm would create conflicts of interest. Majoras, a White House nominee, represented ChevronTexaco Corp. while at Jones Day.

During a hearing last month on Majoras’s confirmation, both senators expressed concern that her job would force her to recuse herself from some petroleum investigations.

FTC Chief Ethics Officer Christian White has said that Majoras would not be prohibited from serving as chairwoman of the commission.

The Senate Commerce, Science and Transportation Committee is scheduled to vote tomorrow on Majoras’s confirmation and the confirmation of Jon Leibowitz, a Democratic nominee, as a new commission member.

“We don’t like recess appointments, but it’s clear the FTC needs to have these people,” said Sen. John McCain (R-Ariz.), who chairs the Senate Commerce Committee. “It’s a matter of when the Senate Democrats will lift their blocking.”

Wyden and Boxer’s holds are still in effect, according to a Wyden spokesman.

“[Wyden] feels as though he has asked repeated questions to her and he has not received what he deems to be sufficient answers,” the spokesman said.

If Majoras and Leibowitz are voted out of the committee tomorrow, they will be placed on the Senate calendar to await a floor vote.

But considering the amount of work that still needs to be accomplished in the Senate before the session ends, one senior Democratic aide was skeptical that either of the nominations would be debated on the floor.

“They will probably recess Majoras,” said the aide. “If they do that, will they recess-appoint Leibowitz? I don’t know.”

An FTC spokeswoman declined to comment and referred questions on the nominees to the White House.

The White House did not return phone calls requesting comment.

If Majoras or Leibowitz were appointed during a recess, their terms would last only until the end of the current Congress.

In May, Bush agreed not to make any more judicial appointments during recesses in exchange for a promise by Senate Minority Leader Tom Daschle (D-S.D.) not to filibuster 25 judicial nominees that were stalled.

That deal, though, did not extend to nominations for non-judicial posts.
Majoras’s nomination is tied to Leibowitz’s in a horse-trade-type deal where both parties got to nominate someone for the commission.

Leibowitz is the vice president of congressional affairs for the Motion Picture Association of America (MPAA). He also served as a staff director for the Senate Judiciary Committee.

Leibowitz’s ties to the MPAA have caused the Center for Digital Democracy (CDD), a nonprofit group that supports diversity on the Internet, to oppose his nomination until after a lawsuit involving the MPAA and a now-defunct Internet video retailer, Intertainer, is settled. Leibowitz has been subpoenaed in the lawsuit, which charges that the MPAA played a role in shutting down the site.

“I don’t think they should vote on his nomination until they sort this out,” CDD Executive Director Jeff Chester said. “I want to get to the bottom of it.”

“Why put him on the FTC and then find out he quashed competition?” he added.
Chester sent a letter to the committee last week detailing his concerns.
But the senior aide said the letter has not changed the committee’s support for Leibowitz.

“A lot of Democratic members [of the committee] have substantial questions about [Majoras],” the aide said, adding, “I don’t see any weakness in Leibowitz’s support.”

The aide said that any questions about Leibowitz “rise to a fairly low level” and that the subpoena does not point to any specific wrongdoing by the nominee.

“I don’t think any Democratic senator is going to vote against him,” the aide said.






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