U.S. SENATE Hearing explores factors in gas pricing

A proposed bill would make an oil cartel such as OPEC illegal.
MILWAUKEE JOURNAL SENTINEL
WASHINGTON -- As the average price of gasoline in the United States has climbed to $1.78 a gallon, a Senate hearing examined what plenty of people would love to know:
Why is the price so high? And what -- or whom -- is to blame?
The hearing, convened Wednesday by the Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights, saw plenty of finger-pointing, though the chief culprit was OPEC, the cartel many at the session loved to hate.
Sens. Mike DeWine, R-Ohio, and Herb Kohl, D-Wis., who led the hearing, have renewed a legislative bid to pave the way for the oil cartel to face antitrust lawsuits in U.S. courts. "NOPEC" is the title of their bill, S-2270.
The measure would amend the Sherman Act to make oil-producing and exporting cartels illegal. The antitrust act, which dates to 1890, sought to end monopolies and make illegal any restriction on trade.
Sen. Arlen Specter, R-Pa., lauded the proposal and said it was high time to act.
"The Americans are clamoring for relief, and it's just really outrageous that we are being gouged by OPEC," he said. He said gas prices and heating oil prices were up; in the latter case, the United States will spend billions on heating assistance for the poor.
Causes of high prices
Among factors leading to high prices, Kohl said, are the price of crude oil, OPEC's manipulation of the oil market and an increasing demand for oil just as the domestic oil industry has opted not to increase refinery capacity.
An official of the Consumer Federation of America, Mark Cooper, cautioned that OPEC was not the only group to blame for high prices. Cooper, who directs research for the group, said the domestic petroleum industry has reaped at least $50 billion to $60 billion in after-tax profits in the past four years.
Although some senators cited a figure from the Federal Trade Commission indicating that 85 percent of the variability in the price of gasoline can be accounted for by the price of crude oil, a Yale economist said it varied according to region, ranging from 69 percent to 91 percent. Market structure and environmental rules also affect prices, said Justine S. Hastings, an assistant professor of economics.
Other factors figure into pump pricing, including a lack of energy conservation efforts, witnesses said. Others said domestic refining capability should be expanded.