WASHINGTON ā Citing growing worries about high gasoline prices, Democratic leaders announced an effort Thursday to give the Federal Trade Commission increased authority to crack down on companies that engage in price gouging.
In doing so, they downplayed the possibility of other options such as a federal gas tax holiday or offering oil companies more government incentives to increase production. Instead, they said the FTC needs more tools, including stiffer fines and penalties and a team of dedicated experts to monitor markets and go after price gouging.
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With voters concerned about the growing toll of inflation, Democrats again signaled their intention going into Novemberās midterm elections to place much of the blame for high gas prices on oil companies. Democrats accused oil executives of āripping off the American peopleā at a contentious hearing this month.
āThereās no excuse for big oil companies to profiteer, to price gouge or exploit families,ā House Speaker Nancy Pelosi, D-Calif., said Thursday
āCongress must do more to beef up the FTCās ability to crack down on potential gas price manipulation and price gouging,ā added Senate Majority Leader Chuck Schumer, D-N.Y. When the Democratic bills reach the House and Senate floor, āRepublicans will face a dilemma: Which side are they on?ā Schumer said. "On the consumer and lowering gas prices? Or on the side of the big oil?ā
The average price of a gallon of gas was $4.14 Thursday, according to the AAA auto club, and is markedly higher than that in California and other western states.
President Joe Biden, aware of the political stakes, has vowed to do all he can to ease ā pain at the pump for American families, ā including ordering release of record amounts of oil from the nationās strategic reserve.
Sen. Maria Cantwell, a Washington Democrat who chairs the Senate Commerce, Science and Transportation Committee, said Congress strengthened the Federal Energy Regulatory Commission's authority to investigate and punish energy market manipulation some two decades ago. That was following the Western energy crisis of 2000 to 2001 when Enron and affiliates were found liable for engaging in various market manipulation schemes.
She said the FTC needs a dedicated team of experts monitoring transportation fuels and looking out for any suspicious pricing behavior, and it needs authority to enact fines and penalties that would lead to corrective action.
āWe need to make sure that there is a policeman on the beat," Cantwell said. "It doesnāt seem right that we should have more transparency on a product like wheat or corn than we would on oil.''
A draft description of the legislation says it would double the maximum penalty for manipulating wholesale oil markets to up to $2 million a day for each violation.
The unit described by Cantwell would be charged with identifying any manipulation or use of market power or other unfair method of competition to distort markets. Once it identifies such behavior, it could then advise the full commission to go after the perpetrators and impose penalties.
Oil executives, testifying before Congress earlier this month, said oil is a global market and that oil companies donāt dictate prices.
āWe do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,ā said Chevron CEO Michael Wirth.
Industry groups dismissed use of the FTC to investigate price manipulation as a political stunt. āUsing the power of the FTC to undertake political investigations of American energy companies will not lower gas prices by a penny,ā³ said Anne Bradbury, CEO of the American Exploration and Production Council, a trade association representing independent oil and natural gas companies.
āAt a time of historic inflation and economic contraction, Americans deserve real policies that boost domestic oil and gas production,'' she said.
Republicans were equally dismissive of the Democratic proposal Thursday.
āMy Democratic colleagues are doubling down on their blatant blame-shifting for political cover,'' said Rep. Cathy McMorris Rodgers of Washington state. āThe American people know this isnāt price gouging or Putinās price hike. Itās a Biden price hike since the day he took office.ā
Gas prices rose late last year amid supply chain problems and increased demand as the economy recovered following the COVID-19 pandemic, but prices have spiked since Putinās Feb. 24 invasion of Ukraine.
The answer to higher gas prices is to increase production here in the U.S., Republicans said.
āAmerica is the worldās leading producer of oil and gas, and we should act like it. We can produce significantly more energy than we do today and unleash the vast resources under our feet,ā³ Rep. Fred Upton, R-Mich., told Energy Secretary Jennifer Granholm at a hearing of the House Energy and Commerce Committee.
But Democrats said oil companies have made a choice to pad profits rather than increase production. Six companies at the April 6 House hearing, including Chevron and ExxonMobil, recorded $77 billion in profits last year.
āHere's the bottom line: They're not using the money for domestic energy production," Schumer said. āThey're using it for stock buybacks. They're using it to make their shares go up. We wouldn't be here if the oil companies were using it to make the American consumer's price cheaper."
Some states have suspended their gas tax to give consumers relief at the pump. Many Democrats in Congress have also called for Congress to suspend the 18.4 cent per gallon federal gas tax. But Pelosi said there was no guarantee the savings would be passed on to drivers.
"It's good PR,'' she said of the tax suspension, but it āmay or may not even have a benefit."
Some Democrats have introduced bills in the House and Senate to impose a windfall tax on oil profits, but the idea has generated little momentum on Capitol Hill.