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Fed trade commission subpoenas big oil over prices Original Source Link: (May no longer be active)
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FTC subpoenas Big Oil firms in U.S. gasoline probe
WASHINGTON (Reuters) - The Federal Trade Commission has sent subpoenas to Big Oil companies in its investigation of gasoline price manipulation and oil refining capacity constraints, and hopes to complete the probe next spring, the agency's head told a U.S. Senate hearing on Wednesday.
The agency sent out "dozens of subpoenas" to companies, including oil giants Exxon Mobil Corp., Chevron Corp. , ConocoPhillips, and the U.S. units of BP Plc. (BP.L) and Royal Dutch Shell Plc., FTC Chairwoman Deborah Majoras said.
She spoke following a hearing on energy profits held by the Senate's energy and commerce committees. "It is a major investigation."
Executives from the five companies mentioned testified earlier in the day on their record profits and high energy prices.
Majoras said subpoenas were sent to companies that operated pipelines, refineries and terminals.
The FTC is asking the companies only for information at this point, but agency staff said the companies' officials could also be asked to testify in the investigation.
"If there is anticompetitive behavior going on between and among these gasoline companies, we'll find that and we will prosecute," Majoras said.
The commission plans to finish its investigation and report its findings to Congress next spring, she said.
The FTC probe was ordered by Congress last summer as part of a broad energy bill with $14.5 billion in industry incentives. Lawmakers included the provision because of a steady climb in crude oil and gasoline prices throughout 2005.
Less than a month after the bill was signed into law, Hurricane Katrina thundered through the Gulf of Mexico and Louisiana, flooding eight major refineries and halting most offshore oil production. The national average retail price of gasoline surged to a record $3.07 a gallon soon afterward.
Lawmakers on the two Senate panels expressed concern about the sharp increase in gasoline prices.
"The FTC staff is looking at pricing decisions and other conduct in the wake of Katrina to understand what has occurred and to identify any illegal conduct," Majoras said.
Majoras also warned that the United States is "vulnerable to these price spikes as long as we accept the tight refining capacity and the dependence that we have on foreign oil," she said. "We are going to be in for a tough road."
Consumers are understandably upset when they face sharp price increases at the gasoline pump, Majoras said.
But congressional proposals for a federal law prohibiting price profiteering are not necessarily the answer, she added.
"Price gouging laws that have the effect of controlling prices likely do more harm than good," Majoras said. "While no consumer likes price increases, in fact, price increases lower demand and help make the shortage shorter-lived than it otherwise would have been."
Twenty-eight states and the District of Columbia have protections against price gouging. But some state attorneys general, consumer groups and lawmakers believe it is time to have a federal law to also fight price gouging.
"When there is a natural disaster or emergency situation in one area of the country that affects the supply and pricing of an essential, nationally distributed product, as (gasoline was) with Katrina, Congress should provide a mechanism that reduces the volatility of prices across state lines," New Jersey Attorney General Peter Harvey told the panel.
"For this, a federal law could protect all American consumers against price gouging during national or regional disasters or abnormal market disruptions" said Arizona Attorney General Terry Goddard.
Bills to prohibit oil price profiteering after natural disasters or national emergencies have been offered by several Democrats. Senate Majority Leader Bill Frist, a Republican, said last month he would support such legislation "if the facts warrant it."
Earlier Wednesday at the Senate hearing, top executives of Exxon Mobil and the four other major oil companies defended a jump in third-quarter profits, which reflected the recent record-high prices of gasoline, crude oil and natural gas.
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11/09/2005 17:14
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