Consumer Groups Demand Investigation of Energy Companies by Bush Administration

March 10, 2003

Consumer Groups Demand Investigation of Energy Companies by Bush Administration

 

Onset of War Likely to Lead to Higher Prices at Pump and Contribute to Failing Economy

 

WASHINGTON, D.C. – Four national consumer groups and consumer activist Ralph Nader today called on President Bush to investigate the role of U.S. oil company price-gouging in high gasoline prices for consumers. The request came in a letter to the White House. The year-long talk of war with Iraq has doubled oil prices, raising them to nearly $40 per barrel, the highest level since the Gulf War in 1991. The groups also asked that a $2 cap be placed on gas prices at the pump in the event of a war.

Higher gas prices hit Americans in several different ways. First, they reduce consumer confidence through “sticker shock” at the gas pump. Second, they raise companies’ cost of doing business, which results in higher costs for consumers, particularly in the airline, trucking and family farm industries. Third, income is transferred from Americans to oil-exporting dictatorships such as Saudi Arabia and Iraq.

“U.S. oil companies are all too happy to receive the spoils of higher oil prices,” the groups wrote. Those signing the letter include Citizen Works, The Foundation for Taxpayer & Consumer Rights, Ralph Nader, the National Consumer League, and Public Citizen. The groups seek a meeting with President Bush, citing the fact that he has yet to meet with a national consumer group since taking office in 2001.

A wave of mergers over the past few years has created giants, such as ExxonMobil, ChevronTexaco and ConocoPhillips, that dominate all sectors of the oil industry, from drilling to selling gas to consumers. As a result, the top five oil companies now control more than 40 percent of all domestic production, half of the domestic oil refineries and more than two-thirds of all gas stations.

The Federal Trade Commission concluded in 2001 that oil companies intentionally withheld gasoline from the western United States market to inflate prices. Because their control over the overall domestic market is even greater now, after the mergers, the ability of these oil companies to manipulate prices has increased. In addition, large oil companies continue to take advantage of the deregulated energy trading sector that allowed Enron to price-gouge West Coast electricity consumers. The same lack of transparency that Enron exploited now can be exploited by ExxonMobil, ChevronTexaco and other oil companies with large positions in the unregulated over-the-counter energy derivatives market.

To read the letter, click here.

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