[Congressional Record Volume 151, Number 118 (Tuesday, September 20, 2005)]
[Senate]
[Pages S10238-S10239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL (for herself, Mr. Reid, Mr. Durbin, Mr. Inouye, 
        Mrs. Feinstein, Mr. Kerry, Mr. Feingold, Mrs. Clinton, Mr. 
        Wyden, Mr. Kohl, Mr. Schumer, Ms. Stabenow, Mr. Dorgan, Mr. 
        Jeffords, Mrs. Boxer, Ms. Mikulski, Mr. Biden, Mr. Lieberman, 
        Mr. Harkin, Mr. Reed, and Mr. Salazar):
  S. 1735. A bill to improve the Federal Trade Commission's ability to 
protect consumers from price-gouging during energy emergencies, and for 
other purposes; to the Committee on Commerce, Science, and 
Transportation.
  Ms. CANTWELL. Mr. President, I rise today to introduce the Energy 
Emergency Consumer Protection Act of 2005. I want to thank the original 
cosponsors of this legislation, which include Senate Minority Leader 
Reid, and Senators Durbin, Feinstein, Kerry, Feingold, Clinton, Kohl, 
Schumer, Stabenow, Dorgan, and Corzine.
  This legislation would put in place a Federal law to prohibit 
gasoline price-gouging during national emergencies, and would institute 
new protections for American consumers from manipulation of oil and 
gasoline markets.
  Even before the devastation caused by Hurricane Katrina and its 
tragic aftermath, skyrocketing oil and gasoline prices were burdening 
American families and our Nation's economy--with the notable exception 
of the oil industry, which continued to rack up record profits. Already 
in my home State of Washington, prices had reached 74 cents a gallon 
more than last year before the storm hit. After the storm--though our 
supplies were not directly affected--prices topped $3 per gallon in 
some areas of my State, including some of the most rural and 
economically challenged. And following that tragic storm, gas prices in 
some areas of this Nation reached almost $6 per gallon.
  The volatility in oil and gasoline prices shows few signs of abating. 
Just yesterday, we saw oil set the new record for a one-day spike in 
prices. At the New York Mercantile Exchange, those prices rose more 
than $4 per barrel just yesterday, to close at $67.39. That's the 
largest single-day price spike since oil started trading on the 
exchange, in 1983.
  It's clear to me that we have a lot of work to do, if we're going to 
get serious about addressing one of the most important challenges 
facing our generation of Americans: improving our Nation's energy 
security. We need a long-term plan and national commitment to free us 
from our over-dependence on oil in general. We need to make the 
American economy more fuel efficient, and position this Nation to 
compete in the 21st Century economy. It is in our Nation's long-term 
economic and national security interests to improve the fuel efficiency 
of American vehicles, provide consumers with the tools to make smart 
choices, provide those same consumers with a broader array of fuel-
flexible vehicles and transportation options, and expand our production 
of home-grown biofuels, in more diverse regions of this country. 
Especially when it comes to fuel efficiency, this body has to date 
lacked the political will necessary to take the steps we must to 
bolster this Nation's energy and economic security. Along with my 
colleagues who have been tireless champions on this issue for so long, 
Senators Feinstein and Durbin, I will continue to fight to put our 
Nation on the right path when it comes to fuel efficiency.
  But in the short-term, we also need to take a close look at the lack 
of transparency and increased concentration in the oil and gasoline 
markets, which has left us in a situation where the very few can set 
the prices that impact the lives of so many. And we need to make sure 
we have a national plan--triggered in cases of national emergencies--
that makes it clear profiteering at the gas pump will not be tolerated.
  Right now, the oil companies know we don't have a plan to protect 
American consumers. That's why we need a Federal law that's going to 
prohibit price gouging, and assess Federal penalties from those who 
exploit national tragedies to maximize their profits. That is why my 
colleagues and I have come together today to introduce this 
legislation.
  In the wake of Hurricane Katrina, we have already heard gas station 
owners complaining that the big oil companies ordered them to raise 
prices. Investigating those claims should be the top job of federal 
regulators--and there should be harsh penalties for that kind of 
behavior, profiteering in the midst of a national disaster.
  Today, 28 States have anti-gouging laws on the books. Unfortunately, 
my own State is not among them. But in crafting this legislation, I 
have looked to those other state laws--focusing specifically on the law 
of the State of New York, where price gouging cases have been 
successfully prosecuted in the past, related to natural disasters.
  But I also want to remind my colleagues again that, while Hurricane 
Katrina exposed the underlying vulnerability of the American economy to 
supply disruptions, average U.S. gasoline prices were already 75 cents 
more than they were a year earlier--and many consumers had begun to ask 
why. While the oil companies have filled their coffers with record 
profits over the past few years, our Nation's airlines, truckers, 
farmers and small businesses across the board are struggling to make 
ends meet because of skyrocketing fuel costs. Worker pensions are in 
jeopardy, and families are already feeling the squeeze.
  That's why this legislation also contains provisions to ban 
manipulation in oil and gasoline markets, and institutes new market 
transparency, investigation and enforcement mechanisms. These measures 
are based on provisions in the recently enacted bipartisan energy bill 
that prohibited these practices in other sectors of the energy 
industry. It provides for the same kind of anti-manipulation and 
transparency rules as those with which electricity and natural gas 
industries must comply. This legislation would apply the same sort of 
anti-manipulation and transparency standards to the oil industry that 
we already apply to companies that sell other essential energy 
commodities.
  Already, these prices are impacting a diverse swath of the U.S. 
economy and hurting hard-working Americans. According to the Department 
of Energy, Americans will spend over $200 billion more on energy this 
year than they did

[[Page S10239]]

last year, totaling over one trillion dollars.
  These energy prices are also costing us jobs. On average, every time 
oil prices go up 10 percent, 150,000 Americans lose their jobs--based 
on the calculations of the Bureau of Labor Statistics and Federal 
Reserve Board.
  What's more, according to the non-partisan Congressional Budget 
Office, a 40 percent increase in gas prices this month will decrease 
total domestic consumption by 0.4 percent. And unless prices come down 
in the fourth quarter, our Gross Domestic Product (GDP) will fall by 
0.9 percent. These energy price spikes are strangling economic growth. 
According to the Congressional Research Service, every time oil prices 
go up by 10 percent for a sustained period of time, we lose somewhere 
between $80 billion and $160 billion in economic growth.
  But while these prices are hurting the economy as a whole, they are 
having a particularly profound impact on our Nation's energy-intensive 
industries. For example, they are hampering the American airline 
industry. The airline industry estimates it will pay $9.2 billion more 
for fuel in 2005 than in 2004, a 103 percent increase from 2001. As 
Southwest CEO Steve Kelly told the Seattle Times just last week, ``We 
are now facing energy prices that no airline can make money at, at 
least with today's [ticket prices].''
  These prices are also making it impossible for our farmers to break 
even. Even during a good year, farmers operate on profit margins of 
only about 5 percent, so fertilizer, fuel, and pesticide price 
increases of 20 percent or more have made it very difficult to get by.
  Other sectors of the transportation industry are also being 
dramatically impacted. Take, for example, the trucking industry. Diesel 
fuel accounts for a quarter of the trucking industry's operating 
expense, or $85 billion in 2005. Each penny increase in diesel costs 
the trucking industry $350 million over a full year.
  And these prices are impacting essential services in this country. 
School districts and local governments are feeling the pain, as are 
federal agencies themselves. Higher fuel prices are expected to add 
$300 million to the Postal Service's transportation costs nationwide 
this year.
  What about the pain these prices are causing, in other ways? Energy 
costs are putting pensions at risk and requiring taxpayer bailouts. 
That's particularly true when it comes to the hundreds of thousands of 
airline workers in this country. United Airlines has already 
transferred $6.6 billion of its pension obligations to the government 
pension agency. If Delta and Northwest terminate their pension plans 
following their bankruptcy declarations, taxpayers would have to cover 
another $12 billion.
  And these prices are especially harmful to low-income Americans. 
Households with incomes under $15,000--about one-fifth of all 
households in this country--this year will spend around 10 percent of 
their total income on gasoline alone.
  And what's going to happen this winter? Heating costs for the average 
family using heating oil are projected to hit $1,666 during the 
upcoming winter months. This represents an increase of over $400 over 
last winter's prices and $700 more than the winter heating season of 
2003 and 2004. For families using natural gas, prices are projected to 
hit $1,568, representing an increase of over $600 over last year's 
prices and $640 more than 2003 and 2004.
  These alarming statistics lead me to question where is all this money 
going? The Congressional Budget Office wrote recently that increased 
gasoline prices are ``basically a temporary redistribution of income 
from consumers of gasoline to the stockholders of refiners.''
  This is a situation that is causing gross inequities between 
different industries themselves. Oil industry profits have nearly 
tripled over the last three years to roughly $87 billion last year--
likely to be even more this year--while the airline industry has lost 
over $32 billion over the last four years.
  How is this happening? While we watch all of these economic impacts 
transpire, our federal regulators have allowed the oil industry to 
strengthen its choke-hold on American consumers and businesses. 
According to the independent Government Accountability Office, mergers 
and increased market concentration with the U.S. petroleum industry has 
led to higher wholesale gasoline prices in this country.
  That's why it's time for this body to do something about it. The 
Energy Emergency Consumer Protection Act is a common-sense approach to 
protect American consumers from gasoline price gouging during national 
emergencies. And it begins to shine the spotlight on the marketing 
practices of the oil industry in general.
  I thank my cosponsors for their support, and I ask my colleagues to 
support this legislation.
  Mr. KOHL. Mr. President, I rise today to join Senator Cantwell in co-
sponsoring the Energy Emergency Consumer Protection Act of 2005. This 
bill will, for the first time, give our Federal Government the needed 
tools to prosecute those unscrupulous individuals and companies that 
seek to take advantage of emergencies and disasters by price gouging 
consumers in the sale of gasoline and other petroleum products. With 
the tremendous suffering caused by Hurricane Katrina resulting in gas 
supply disruptions, and with gas prices at record levels well in excess 
of $3.00 per gallon in many places throughout the Nation, the time is 
now for passage of this essential legislation.
  In the wake of the Hurricane Katrina disaster and the associated 
disruptions to supply and distribution networks, the national average 
price of gas is now at record levels. Allegations of price gouging and 
drastic price spikes were unfortunately commonplace in the immediate 
days following the disaster--including, for example, gas being sold at 
$6.00 per gallon in the Atlanta area. Many believe that the human 
suffering caused by loss of life, housing, and employment, has been 
compounded by some unscrupulous individuals and businesses who have 
taken advantage of the emergency by gouging consumers. Yet, under 
current law, the Federal Government has virtually no ability to 
prosecute such price gouging. Our bill will correct this critical 
deficiency.
  This legislation contains several important provisions. First, it 
gives the President the authority to declare an energy emergency during 
times of disruptions in the supply or distribution of gasoline or 
petroleum products. Second, the bill, for the first time, declares 
illegal under federal law selling gasoline or petroleum products at a 
price unconscionably high or when circumstances indicate that the 
seller is taking unfair advantage to increase prices unreasonably in 
times of energy emergency. Those who violate this law face civil 
penalties of up to $3,000,000 per day and criminal penalties, including 
jail terms of up to five years for individuals, as well. The bill also 
forbids market manipulation in connection with the sale of gasoline and 
petroleum products and empowers the experts at the Federal Trade 
Commission to write regulations setting forth specific conduct 
constituting market manipulation. Additionally, our bill gives states 
Attorneys General the power to enforce these provisions as well.
  These measures are an urgently needed deterrent to prevent all those 
who would seek to profit from this enormous tragedy by price gouging 
consumers in the price of gasoline. It will protect consumers--both 
those who were the victims of the immediate effects of Hurricane 
Katrina and those around the country--who suffer every day at the gas 
pumps from the real and growing economic pain caused by record high gas 
prices. As Ranking Member on the Senate Antitrust Subcommittee, I 
believe that this legislation is necessary to prevent unscrupulous 
companies using the disaster on the Gulf Coast to justify uncompetitive 
gas price hikes. All of us can agree that profiteering and price 
gouging in the price of an essential commodity like gasoline is simply 
unacceptable. Such conduct violates every principle of free and fair 
competition. We must give the Federal Government the necessary tools to 
prevent such misconduct, and prosecute those who do so.
  I urge my colleagues to support the Energy Emergency Consumer 
Protection Act.




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