[Congressional Record (Bound Edition), Volume 150 (2004), Part 7]
[Senate]
[Page 9452]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  GASOLINE FREE MARKET COMPETITION ACT

  Mr. FEINGOLD. Mr. President, I would like to express my support as a 
cosponsor for S. 1737, the Gasoline Free Market Competition Act. Over 
the past few months, oil prices have skyrocketed $40 per barrel, the 
highest price since 1990. High gasoline prices are inextricably linked 
to high crude oil prices. And these high oil and gas prices hurt 
Americans across the Nation and from all walks of life. Farmers, 
teachers, and small business owners across the country and in Wisconsin 
in particular are getting hit hard by these outrageous costs.
  The statistics are staggering. For gasoline, the increases in crude 
oil prices have resulted in an average national price of $1.96 per 
gallon. In Wisconsin, the current average price for a gallon of self-
service regular unleaded gasoline in Wisconsin is $1.821, according to 
AAA's Fuel Gauge Report. The current average is 7.1 cents higher than a 
month ago at this time and 23.6 cents higher than a year ago at this 
time. These are the highest gas prices we have seen in 13 years.
  Unfortunately, under current law, the Department of Energy can 
conduct investigations into gasoline prices, but it does have the power 
to enforce the law or sanction companies for price manipulation. On the 
other hand, the Federal Trade Commission, FTC, does have the power to 
protect consumers from gas price manipulation. The FTC is supposed to 
promote competition and free markets, but all too often, the FTC has 
not actively overseen energy markets to prevent price fixing and market 
manipulation.
  Congress needs to direct the FTC to eliminate anticompetitive 
practices that currently cause a chokehold on the competitiveness of 
independent gas distributors and gas station owners. That is why I am 
supporting the Gasoline Free Market Competition Act, S. 1737. This 
legislation would modernize antitrust law to prohibit anti-ompetitive 
practices by single companies in the concentrated gasoline markets. The 
gasoline market in Wisconsin and at least 27 other States are now 
considered to be ``tight oligopolies'' with four companies controlling 
more than 60 percent of the gasoline supplies. We need to ensure that 
these concentrated markets are not subject to manipulation.
  S. 1737 would address two major problems tied to gasoline price-
fixing called ``redlining'' and ``zone pricing.'' In tightly 
concentrated markets, numerous studies have found oil company practices 
are driving independent wholesalers and dealers out of the market. One 
anticompetitive practice is called ``redlining,'' which 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 station cannot 
compete. Investigations have also found large consolidated oil 
companies control not just the buying choices of local gas stations, 
but also the selling prices of gasoline distributors. This anti-
competitive practice is called zone pricing. The company bases prices 
not on the cost of producing gasoline, but on the maximum a 
neighborhood will pay.
  The Gasoline Free Market Competition Act, S. 1737, will do three 
things to address this problem. First, the bill would establish 
``consumer watch zones'' for concentrated gasoline markets like 
Wisconsin. Where a few companies control a large part of the market, 
they can manipulate supplies and restrict competition with ease. 
Therefore, the FTC should watch consolidated markets more carefully.
  The Gasoline Free Market Competition Act also shifts the burden of 
proof for price-fixing. If the FTC finds that an oil company is 
employing anticompetitive practices in a consumer watch zone, the 
company should have to prove it is not hurting consumers. Redlining and 
zone pricing would be presumptively illegal. Oil companies that engage 
in anticompetitive practices that manipulate supply or limit 
competition would have to prove these practices do not hurt consumers.
  Finally, the act gives the FTC clear ``cease and desist'' authority 
to stop price-fixing. In consumer watch zones, the FTC could issue 
``cease and desist'' orders to companies participating in these 
anticompetitive practices, forcing them to stop gouging consumers. The 
Congress needs to act now to ensure that anticompetitive practices do 
not lead to further gas price increases, as many energy analyst are 
predicting.

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