The oil industry should be regulated more

The House Judiciary Committee met today to discuss ‘Retail Gas Prices’ and the effects it has on consumers. The Competition Policy and Antitrust Laws Task Force Subcommittee led the hearing, which discussed the future of diesel fuel and it’s effects on small businesses as well as consumers. Many of the witnesses suggested drilling for oil in ANWR, the Arctic National Wildlife Refuge, and turning the oil market from an oligarchy to a competitive market.

We regulate onions more than we do oil, said Dr. Mark Cooper, director of research of the Consumer Federation of American today. The oil industry is not a competitive market and thus is under the jurisdiction of the antitrust task force. Cooper stressed the necessity to not ignore the traditional problem of the market structure. Since the market is working like a “cartel”, drilling in the United States whether in ANWR or creating more refineries will not influence the world price of oil. Cooper said it is necessary to change the market and make it more competitive, which will in turn lower gas prices.

Small business petrol and convenience stores are also suffering with the high costs of gasoline. Convenience stories earn profit not from gas, but from the food inside, however with gas prices so high, many consumers are driving farther to get cheaper gas. This is putting thousands of hard working American families at risk, said Bill Douglas, chief executive officer of Douglass distributing company.

David Owen, president of the National Association of small trucking companies, described the hardships smaller trucking companies are going through with the high diesel fuel costs. Small business truckers, which started more as grassroots organizations or family run businesses, cannot stop running or go on strike. If they do either of these things, then they will go out of business, Owen said.

Gas prices making us reach for change

Consumers are being tipped upside down by the big oil companies, with money being shaken out of their pockets at the pump. This statement made by Chairman Edward Markey (D-MA), was widely echoed by all members of Congress present at the House Select Committee on Energy Independence and Global Warming. President Bush, he said, refuses to use our oil reserves, and not only is that something that can be done, it is something that should be done. Congressman James Sensenbrenner (R-WI) echoed that by adding that they need to put aside bipartisanship and releasing the reserves was essentially paying attention to Economics 101.

Congressman Jay Inslee (D-WA) made an even stronger statement, saying ‘when your house is on fire it is more important to get the hose instead of take out another insurance policy.’ Why is it, he said, that we regulate wheat but not gas? Speculation is driving up prices, and the administration has refused to help us.

And that speculation of world condition is 1/3 of the price per barrel, according to Dr. Mark Cooper, Director of Research at the Consumer Federation of America. America uses 1/4 of the oil in the world, and that 1/3 price is actually $38 dollars a barrel [as of today]. A side effect of high gas prices, is that trucks deliver almost all the consumer goods in the United States, Dave Berry, Vice President of the Swift Transportation Company, Inc, added. The high prices of gas and/or diesel are causing prices in consumer goods to go up, since they are trucked from place to place.

Kevin Book, Sr. Vice President & Senior Analyst for Energy Policy, Oil, & Alternative Energy, summed up the crisis as follows: We need to save energy on a daily basis and quit our oil addiction. This element was not expanded on, and instead all the questioning reverted to whether or not the panel thought that President Bush should deploy the Strategic Petroleum Reserve. The answer was a very enthusiastic “yes” from Dave Berry. We’d like the President to stop filling the SPR, he said, and consumers at the pump will see the benefit.