Commerce Hearing Exposes Gaps in FTC Price Gouging Report
Despite FTC Failure to Answer Key Questions, Cantwell Optimistic about Chances for Bipartisan Action on Price Gouging Legislation
WASHINGTON, DC – At a hearing today, U.S. Senator Maria Cantwell (D-WA) joined a bipartisan group of Senate Commerce Committee members in questioning the thoroughness of the price gouging report issued yesterday by the Federal Trade Commission (FTC). Despite the FTC’s failure to answer a number of critical questions, Commerce Co-Chairmen Senators Ted Stevens (R-AK) and Daniel Inouye (D-HI) both suggested the Committee should take up federal price gouging legislation—a development Cantwell touted as positive for American consumers.
“Today’s hearing underscored the broad support we know exists in the Senate for a federal ban on gas price gouging” said Cantwell, a member of both the Senate Commerce and Energy Committees. “I’m optimistic we can reach a bipartisan agreement on legislation soon. The FTC is failing to do its job today. This legislation could help give them an infusion of backbone.”
Last September, Cantwell introduced the Energy Emergency Consumer Protection Act (S. 1735), cosponsored by Senator Inouye and thirty other senators. The legislation would outlaw gas price-gouging during national emergencies, increase energy market transparency, impose tougher fines and criminal penalties on violators, and give the Federal Trade Commission and state attorneys general new powers to go after companies that manipulate oil and gas prices.
Also at Tuesday’s hearing, Cantwell was among senators on both sides of the aisle that took aim at the FTC price gouging report issued yesterday, which the senators said was incomplete in several important respects. While the report identified seven instances of price gouging among refiners, the FTC appeared to go out of its way to make excuses on these entities’ behalf. Given the redaction of critical pieces of information, it is impossible to tell whether the FTC further investigated the specific prices charged by these entities within various geographic markets. In addition, multiple senators took issue with the thoroughness of the commission’s review of oil industry inventory practices, upstream profits, exporting, and speculation in energy markets.
“On at least two separate occasions long before the infamous Enron ‘Grandma Millie’ tapes turned up, federal regulators said there wasn’t any market manipulation in the West—that it was all just supply, demand, and environmental laws,” said Cantwell. “We now know that those investigations were fundamentally flawed. Any investigation is only as good as the questions asked. Once again, by failing to ask all the right questions, this investigation hasn’t given American consumers the complete picture they deserve.”
“The report found evidence of price gouging, but the FTC followed it up with a massive failure to connect the dots,” continued Cantwell. “The FTC report tries to explain away the evidence. If we learned anything from the collapse of Enron, it’s that proactive consumer protections are far better than trying to fashion some measure of justice after the theft of billions of dollars. I hope that we can move quickly to get a comprehensive, bipartisan federal price gouging ban on the books.”
In November, Cantwell wrote to the Senate Commerce Committee leadership asking to work together to develop consensus legislation to protect consumers from gas price gouging. In a later floor vote, a similar amendment received the support of 57 Senators, falling just short of the 60-vote supermajority needed for passage at that time. The measure has also gained the support of eight governors and a number of state attorneys general.
The topic of energy trading was also a focus of the hearing. Last month, Cantwell joined Senators Dianne Feinstein (D-CA), Olympia Snowe (R-ME), and others in introducing bipartisan legislation to enhance the transparency of these markets (S. 2642). A subsequent hearing of the Democratic Policy Committee co-chaired by Cantwell revealed evidence that “wash trading”—a practice used by Enron and others during the Western energy crisis—has taken place on some of the same unregulated exchanges, which have recently begun trading in oil and gasoline commodities. Currently, up to 80 percent of energy trading takes place beyond the reach of federal regulators, thanks to the “Enron loophole” in U.S. commodity trading laws.
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