Washington, DC – Today, Democratic Leader Harry Reid, Assistant Democrat Leader Dick Durbin, and Senator Maria Cantwell sent a letter to the White House asking the President to take a leadership role in helping to bring down gas prices. While oil companies are experiencing record profits, American families and businesses are facing record gas prices, even when crude oil supplies are at record highs. Democratic Senators are calling on the President to work with the Federal Trade Commission to help calm the oil futures market, to investigate any artificially inflated prices, and the lack of transparency in oil and gasoline markets. It’s time for the Bush administration to show some leadership on this issue. The Administration needs to put the concerns of average Americans ahead of the special interests by addressing the crushing burden skyrocketing gas prices have placed on Americans.
August 19, 2005
President George W. Bush
The White House
Washington, D.C. 20500
Dear Mr. President:
As you may be aware, the national average price for a gallon of regular gasoline has recently reached record heights. A gallon of regular gasoline currently retails for $2.55, up 36 percent from a year ago, and premium grades have topped three dollars per gallon in some regions.
Not surprisingly, the recent spike in gasoline prices has caused significant concern and hardship for American families and businesses all across our country. These recent increases will impose a cost of $350 on every American family this year. News reports indicate school districts may be forced to cut educational programs to cover the increase in costs to operate their buses. And small businesses and commercial drivers are also struggling to keep up with the cost of gasoline and diesel fuel.
The cumulative impact of these price increases has fueled inflationary growth and hurt our economy. Last week, citing record high jet fuel prices, the airlines tacked on a new fuel surcharge to airline tickets in the amount of $10.00 per ticket. On Wednesday, the Department of Labor reported that wholesale prices increased one percent in July, double the expected increase; over the last twelve months producer prices have increased 4.6 percent, the fastest rate of increase in almost ten years.
Adding to our constituents’ frustration is the fact that they are being forced to pay these higher prices at the same time the oil companies and refiners are enjoying record profits totaling tens of billions of dollars. The following companies reported the following earnings in the second quarter of 2005: ExxonMobil up 32 percent, to $7.62 billion; BP up 37 percent, to $5.84 billion; Shell up 35 percent, to $5.34 billion; ChevronTexaco up 12.8 percent, to $3.68 billion; and ConocoPhillips up 55 percent, to $3.10 billion.
According to the Energy Information Administration, crude oil supplies are significantly higher than they were at this time last year. This fact points to the need to calm oil markets that are being inflated by anticipated increases in international demand, a risk premium associated with security concerns in the Middle East, speculative oil futures trading, and the lack of transparency in the oil and gasoline markets.
We believe immediate Presidential leadership is needed to help address this problem. Given the lack of transparency in the oil and gasoline markets, it is imperative that the petroleum industry give an accurate and straightforward explanation for the causes of the recent price spikes. We respectfully request that you take the following actions:
1) Direct the Federal Trade Commission (FTC), in consultation with the Department of Energy, to issue regulations requiring full disclosure by refiners and distributors of their wholesale motor fuel pricing policies, with a separate listing of each component contributing to prices, including the cost of crude oil, refining, marketing, transportation, equipment, overhead, and profit, along with information regarding any rebates, incentives, and market enhancement allowances;
2) Direct the FTC to investigate the retail price of gasoline in any state where the average price of regular grade gasoline increases by 20 percent or more for a period of at least seven days during any three-month period to determine if the price of gasoline is being artificially manipulated by reducing refinery capacity or by any other form of manipulation; and
3) Direct the FTC, the Commodity Futures Trading Commission, and the Department of Justice to exercise vigorous oversight over the oil markets to protect the American people from price gouging and unfair practices at the gas pump and in the supply chain.
These actions will provide the information necessary to determine if there are any illegalities in corporate pricing policies and provide consumers with the information needed to understand why they must pay record prices for gasoline while the industry, across the board, is enjoying record profits.
Thank you for your consideration of these actions to address this urgent concern of U.S. gasoline consumers.
Senator Harry Reid
Senator Dick Durbin
Senator Maria Cantwell