Tuesday, May 22, 2007
22 Governors Ask For Gas Price Probe
LABELLE, FL. -- Florida Governor Charlie Crist joined 21 other Governors in calling for a congressional inquiry into the sudden, unexplained spike in gas prices. The bipartisan group of Governors sent a letter yesterday to Congressional leaders, asking for federal hearings and an investigation into the rising price of gasoline. The record-high cost of a gallon of regular gasoline is averaging $3.10 in Florida, according to the American Automobile Association, compared to $2.91 a month ago and $2.86 a year ago. Nationally, the record-high average price is $3.18, compared to $2.86 a month ago and $2.90 a year ago.
In 2005 as Attorney General, Charlie Crist conducted a detailed examination of gasoline pricing in Florida, eventually concluding that two factors besides high crude oil prices were the primary contributors to price spikes. Those two factors were the gasoline industry's practice of intentionally keeping inventories low and a shrinking number of suppliers within the industry. Fewer suppliers exist due to mergers of larger companies and reduce consumer choice. For instance, over the recent past, eight companies have become four with the creation of ExxonMobil, Chevron/Texaco, BP/Amoco and Conoco-Phillips.
The Governors' letter to Congress says in part: " The reasons for these massive increases do not appear to be tied to any recent changes in geo-political events or a weather crisis. While there have been reports regarding problems with refinery capability, even this explanation raises more questions than answers. Reliability, capacity and supply issues have been at the forefront of federal energy policy for years. It is difficult to understand how oil companies can be making record profits each quarter without making capital investments in refineries that would address reliability issues.
Families and businesses across the nation are straining under these uncontrollable prices. The economies of our states as well as the national economy are likely to suffer because of these continually spiraling prices. We are all affected by rising gas prices and it is not yet Memorial Day, the traditional start of the summer driving season. Many industry-based and other observers are predicting that gas prices may hit $4 a gallon by late summer.
We believe Congress has the authority and the unique ability to conduct a thorough investigation into gas pricing. This is not a simple "supply and demand" issue because gasoline is not a simple commodity. It is a basic necessity. With specific regard to the refinery issue, legislative or regulatory remedies may need to be explored. It is our hope that Congress can help obtain and provide answers to the circumstances and issues pertaining to these unexplained price escalations."