[Congressional Record (Bound Edition), Volume 153 (2007), Part 10]
[House]
[Pages 14635-14636]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               GAS PRICES

  The SPEAKER pro tempore (Mr. Ellsworth). Under the Speaker's 
announced policy of January 18, 2007, the gentlewoman from New York 
(Mrs. Maloney) is recognized for 11 minutes.
  Mrs. MALONEY of New York. Mr. Speaker, schools will be letting out 
soon, and American families will be hitting the road for their summer 
vacations. But how far will they get this year with sky-high prices at 
the pump?
  The average price of regular gasoline is hovering near record highs, 
and this week stands at about $3.16 a gallon. This means American 
families are spending nearly $54 on average every time they fill up 
their tank, an astonishing $30 more per tank since President Bush took 
office.
  According to the AAA, the typical American family is on course to 
spend over $3,600 this year just to fill up their cars if these prices 
persist. Gasoline prices set a new record of $3.22 a gallon on May 21, 
according to the AAA's fuel gauge report. Gasoline prices in 34 States 
broke record highs in the past month. Prices are expected to climb 
again as the summer driving season progresses.
  Record high gas prices may not cause hardworking Americans to cancel 
vacation plans, but they are forcing families to cut back on other 
spending, putting our economic growth at risk.
  Wherever I go Americans are asking, why are gas prices so high? 
Surprisingly, the answer is not because crude oil prices are higher 
than they were last year. According to the Department of Energy, the 
largest component of U.S. retail gasoline prices is the price of crude 
oil. What is unique about the current situation is that crude oil 
prices, the red line, are lower right now at the onset of the summer 
driving season than they were at this time last year. But, as we all 
know, gasoline prices, the blue line, are higher than they were this 
time last year.
  The Department of Energy projects that crude oil prices will average 
$2 less per barrel this summer than last. But they also predict that 
gasoline will average about $2.95 a gallon this summer, up more than a 
dime from last summer's $2.84 a gallon on average. Analysts attribute 
this in large part to the fact that our refinery capacity has failed to 
keep pace with demand.
  We haven't had a new refinery built in the United States in 30 years, 
pushing refineries to operate at capacity levels that are overtaxing 
the system. Refining costs account for about 22 percent of the retail 
price of gasoline, up from 15 percent in 2003.
  With the increase in oil and gas prices over the last several years, 
refining margins are at historical highs. Refining profits in the first 
quarter of 2007 increased 36 percent over last year, and the U.S. 
refining margin increased to over $17 per barrel of refined oil.
  High gas prices should be an incentive for expanding refining 
capacity, but instead of building new refineries the industry argues 
that it has focused on expanding and upgrading existing refineries to 
keep up with increased demand.
  U.S. refining capacity has stayed relatively stable over the past few 
years, and that is the red bar here. But demand has steadily increased, 
and that is the blue bar. So capacity utilization has risen, regularly 
reaching levels above 90 to 95 percent of capacity throughout much of 
the 1990s and continuing into this decade.
  The problems and risks associated with running near full capacity 
have become very apparent in recent months. As this chart shows, 
overtaxed refineries have required unplanned maintenance which has 
taken supply off line and caused short-term price spikes. Refiners 
typically perform planned maintenance during off-peak driving season, 
which impacts available stocks of gasoline when the demand is lower. 
But the increasing frequency of unplanned maintenance is cause for 
great concern. Unexpected refinery outages choke off supply and cause 
price spikes at the pump.
  A recent spate of such unplanned outages in refineries across the 
country have made the price spikes a common occurrence and have kept 
gas prices in the headlines. BP, ConocoPhillips, and Valero Energy have 
all reported unexpected shutdowns at a number of U.S. refineries.
  Oil companies certainly have the profits to invest in increased 
capacity, but they are not investing. With capacity as tight as it is, 
refiners can boost profits by taking capacity off line, particularly 
when there is a lack of competition at the refinery level. It is hard 
to prove that they are purposely limiting supply, but the risk of 
manipulating capacity to maximize profits is certainly greater with 
fewer players in the market.

                              {time}  2345

  Consumer advocates, such as the Consumer's Union Mark Cooper, argued 
that a lack of competition in the market has enabled oil companies to 
exploit the tight market they have created by purposefully uninvesting 
and mismanaging refinery maintenance.
  With refining margins as high as they are, construction of a new 
refinery is not a losing proposition, particularly for profit-laden Big 
Oil companies. But ExxonMobil's CEO, Rex Tillerson, has indicated that 
he will not build a new refinery in the U.S., pointing to research that 
U.S. gasoline consumption will plateau in coming years as ethanol and 
energy efficiency measures become more prevalent.
  The current runup in gas prices underscores the urgent need for a 
better national energy policy. But instead, we see stubborn inaction 
and complicity on the part of the administration. The Bush 
administration has turned a blind eye to oversight of the oil and gas 
industry in general, and especially with respect to mergers. Mergers in 
the gas and oil industry over the past decade have resulted in 
dangerously concentrated levels of ownership in the U.S. refining 
market, leaving us with only five major domestic oil companies 
controlling the majority of our domestic refining capacity.
  The President has approved mergers at such a break-neck speed that by 
2005, the top 10 refiners controlled 81 percent of the market, up from 
56 percent since 1993. So it has jumped an astonishing amount. This 
concentration of refiners has restricted production capacity, causing 
American consumers to pay more at the pump than they would be with more 
market competition. The lack of competition is hurting consumers now 
and will hurt our economy in the future.
  As a first step toward protecting consumers, the House passed the 
Energy Price Gouging Prevention Act just before the Memorial Day 
weekend. This legislation will provide relief to consumers by giving 
the Federal Trade Commission the authority to investigate and punish 
those who artificially inflate the price of energy. It would ensure the 
Federal Government

[[Page 14636]]

has the tools it needs to adequately respond to energy emergencies and 
prohibit price gouging. With a priority on refineries and Big Oil 
companies, especially during a time of national crisis such as 
Hurricane Katrina, the Energy Price Gouging Prevention Act will provide 
the FTC with new authority to investigate and prosecute those that 
engage in predatory or unconscionable pricing from oil companies on 
down to local gas stations, with an emphasis on those who profit most. 
This includes the gouging of gasoline, home heating oil, propane or 
natural gas. It will enpower the Federal Government to impose tough 
civil penalties of up to triple damages of all excess profits from 
companies that have cheated consumers.
  Until we have abundant renewable energy alternatives to benefit 
consumers, in the short term Congress must carefully look at the 
current market framework to see what can be done to improve competition 
in the marketplace. At the refinery level, Congress should look at 
strengthening antitrust laws, changing the way oil mergers are reviewed 
by U.S. antitrust agencies, cracking down on anticompetitive actions by 
oil companies, and/or improving price transparency at the wholesale 
level.
  Mr. Speaker, high gas prices is an issue that has a supply side and a 
demand side, and we need to address both. Government leaders and 
businesses are recognizing the need to reduce our dependency on oil by 
making our vehicles more fuel efficient and investing in clean, 
renewable energy sources and technologies.
  Mr. Speaker, I request additional time.
  The SPEAKER pro tempore. The Speaker's policy of January 18, 2007 
does not allow for an extension of the gentlewoman's time.
  Mrs. MALONEY of New York. Mr. Speaker, I ask permission to revise and 
extend my remarks.
  The SPEAKER pro tempore. Without objection.
  There was no objection.
  Mrs. MALONEY of New York. Mr. Speaker, last month, it was announced 
in my home district that New York City cabs are going green, as the 
Mayor plans to replace the city's fleet with hybrid cars by 2012.
  The Joint Economic Committee recently released a report entitled, 
``Money in the Bank, Not in the Tank'', which argues that we have to 
take the issue of improving fuel efficiency seriously.
  America's cars were more efficient two decades ago when our fleet-
wide average was 26.2 miles per gallon. Now, our fleet-wide average for 
cars and trucks has slipped to 25.4 miles per gallon. Clearly, we're 
going in the wrong direction.
  And it's hurting our competitiveness--our nation ranks at the bottom 
of the list of industrialized nations when it comes to fuel efficiency.
  In Europe, fuel efficiency averages around 40 miles per gallon and 
they're looking to raise it to 51 miles per gallon by 2012. Japan is 
trying to get to 50 miles per gallon by 2010 across their fleet.
  If we raised CAFE standards to 35 miles a gallon from 27.5 miles per 
gallon, the average American family would reduce their spending on gas 
by nearly one-quarter.
  With families on course to spend more than $3,600 on average filling 
up their cars this year, this would be a savings of $900 a year.
  Despite major technology gains, especially hybrid technologies, and 
record-breaking gas prices, we are decades behind when it comes to 
making our cars more efficient.
  More efficient cars mean American families spend less at the pump, 
we're less dependent on foreign oil, and our environment benefits from 
lower emissions.
  The President's priority has been to give tax breaks to oil and gas 
companies even as their profits have soared to new heights. The big 
five oil companies enjoyed eye-popping profits of $120 billion last 
year.
  Instead of using those profits to expand refining capacity or make 
serious investments in renewable energy, the big oil companies are 
buying back their own stock to enhance prices for their shareholders.
  Moreover, oil companies seem to be working hard to prevent gasoline 
alternatives, such as ethanol-based products, from being pumped at 
their branded gas stations.
  In our first 100 hours of work in the majority, the House voted to 
roll back $14 billion in taxpayer subsidies for Big Oil companies and 
reinvest that money here at home in clean alternative fuels, renewable 
energy and energy efficiency.
  We have also passed a bill that encourages research and development 
of markets for biofuels.
  Speaker Pelosi has created a Select Committee on Energy Independence 
and Global Warming to develop policy initiatives and assure that 
progress is made toward reducing our dependence on foreign oil.
  Democrats in Congress are working on legislation to protect consumers 
and increase our energy independence by investing in renewable energy 
sources and reducing global warming emissions.
  We need this new direction for energy policy that brings relief to 
American families and strengthens our economy.

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