[Congressional Record Volume 149, Number 144 (Wednesday, October 15, 2003)]
[Senate]
[Page S12621]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN:
  S. 1737. A bill to amend the Clayton Act to enhance the authority of 
the Federal Trade Commission or the Attorney General to prevent 
anticompetitive practices in tightly concentrated gasoline markets; to 
the Committee on the Judiciary.
  Mr. WYDEN. Mr. President, it's time to bring competition back into 
our Nation's gasoline markets. Across America, gasoline prices have 
recently soared to the highest levels ever. Right now, gasoline costs 
12 cents more than it did at this time last year. In my home State of 
Oregon, folks are paying a whopping 32 cents more per gallon than in 
October of last year.
  Proven price manipulation is siphoning competition out of the 
gasoline markets and stealing money from Americans' wallets. It's time 
that government regulators opened their eyes to reality of rampant 
price manipulation by gas companies and protected American consumers 
from getting pummeled at the pump. That's why today I am introducing 
the Gasoline Free Market Competition Act.
  Every extra penny Americans spend on the artificially inflated price 
of gasoline is a penny they aren't spending on other things--like 
clothes, groceries, or other consumer items. The difference is that 
buying a new washer dryer helps create jobs; paying extra for gas only 
creates a fatter bottom line for oil companies, nothing more.
  With people losing their jobs and the economy in sorry shape, 
Congress should act right now to protect the American people from oil 
company price gouging. Artificially inflated gas prices hurt American 
families three ways: it steals dollars from their pocketbooks, slows 
down job creation, and often raises the price of the goods families 
need to buy due to increased transport costs.
  Folks are looking to Congress to address gasoline price spikes and 
industry pricing policies that can't always be explained away by the 
market. But as the American people have called out for relief, the 
Federal government has stayed silent--refusing to respond in any 
meaningful way to the gas price crisis.
  The Secretary of Energy says he's conducting an informal 
investigation to look into the issue. But under current law, the 
Department of Energy has no power to do anything about gasoline prices.
  On the other hand, the Federal Trade Commission (FTC) does have the 
power to protect consumers from gas price manipulation. Yet they've 
done almost nothing. They turned aside evidence of serious, documented 
anti-consumer practices--such as redlining and zone price--that inflate 
gas prices. They've argued that they can only prosecute if they find 
out-and-out collusion, setting out a standard that is almost impossible 
to prove against savvy oil interests.
  You can see the results of the FTC's inaction at gas stations in 
Oregon and all across America. Nationwide, gasoline markets in Oregon 
and at least 27 other States are now considered to be ``tight 
oligopolies'' with 4 companies controlling more than 60 percent of the 
gasoline supplies. The problem is particularly dire in the West, where 
California, Oregon, Washington and Idaho are four of the top six States 
for high gas prices today.

  In these tightly concentrated markets, numerous studies have found 
oil company practices are driving independent wholesalers and dealers 
out of the market. One practice they employ, called ``redlining,'' 
limits where independent distributors can sell their gasoline. As a 
result, independent stations must buy their gasoline directly from the 
oil company, usually at a higher price than the company's own brand-
name stations pay. With these higher costs, the independent stations 
can't compete.
  Redlining is just the tip of the iceberg. Investigations have also 
found oil companies controlling not just stations' buying choices, but 
also distributors' selling prices. Companies engage in a practice 
called zone pricing, basing prices not on the cost of producing 
gasoline, but on the maximum a neighborhood will pay. They have 
squeezed out smaller refineries that could increase supply and 
introduce new competitions. They have exported gasoline and oil to Asia 
at rock-bottom prices, making up their profits by sticking West Coast 
consumers with the difference. So, stopping one anti-competitive 
practice, by itself, won't get the job done.
  The solution is to update antitrust law to prohibit anti-competitive 
practices by single companies in concentrated markets. The current 
standard of collusion is unenforceable. Smart oil companies will never 
hole up in a room and collude to set prices; they don't need to.
  Chevron/Texaco's North American President David Reeves admitted to a 
congressional panel that the West Coast gasoline market is so dominated 
by a limited number of large committed refinery/marketers whose 
individual actions can have significant market impact.
  Here's how the Gasoline Free Market Competition Act would tackle the 
problem. First, the Federal Government would establish consumer watch 
zones for concentrated gasoline markets. Where control is concentrated, 
supplies can be manipulated, and competition restricted with ease. 
Where that capability is ready-made, the FTC should watch markets more 
carefully.
  Oil companies employing anti-competitive practices in consumer watch 
zones should have to prove they're not hurting consumers. The whole 
litany of anti-competitive practices should be considered presumptively 
illegal. That includes exporting at a discount and pressuring 
independents--all the practices that manipulate supply or limit 
competition.
  Consumer watch zones would also be empowerment zones for quick action 
by the FTC. In these zones, the agency could issue cease and desist 
orders to companies participating in these anti-competitive practices, 
forcing them to stop gouging consumers.
  These legislative proposals are first steps toward bringing back 
competition to the Nation's gasoline markets. Congress should act now 
to address the problem of skyrocketing gasoline prices--because even 
the oil companies admit the market won't solve the problem on its own. 
Last month, a report by the Rand Corporation revealed that even oil 
industry officials are predicting more price volatility in the future. 
That means consumers can expect more frequent and larger price spikes 
in the next few years.
  I have spent years documenting unethical and anti-competitive 
practices in this country's gasoline markets--practices that have 
driven prices up and driven consumers crazy at the pump. The American 
people deserve relief from high gas prices and the Congress should act 
on their behalf.
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