FOR IMMEDIATE RELEASE: September 5, 2005
In Light Of New Survey Showing Shocking Disparity In Gas Prices In NY/NJ, Schumer, Corzine Call For Top-To-Bottom FTC Investigation Of Entire Oil Industry
Hurricane Katrina-Related Gas Price Gouging Costing Metro Area Residents Millions, Could Continue Long After Clean up Period without Decisive Action Senators ask FTC to look at Full Picture, Gas Stations, Big 4 Oil Companies and Pipelines
In light of shocking disparities in gas prices in the New York/New Jersey Metropolitan area, and, as gas prices continue to soar, today Senators Charles E. Schumer and Jon S. Corzine called on the Federal Trade Commission (FTC) to launch a top to bottom investigation into the oil industry. The Senators, who released a survey that showed a huge disparity in gas prices throughout the entire New York and New Jersey Metropolitan area expressed their concern that people could be profiting in the wake of the devastation caused by Hurricane Katrina.
“We are only beginning to comprehend the breadth of what truly is a devastating national tragedy. Hurricane Katrina has destroyed homes, communities, families, and an entire region of this nation. The thought that a few bad apples might profit from this tragedy is unconscionable,” Schumer said.
“This should be a time of shared sacrifice not exploitation,” said Corzine. “The unprecedented damage of hurricane Katrina cannot be compounded by gasoline price gouging, it is our responsibility to see that those who would seek to gain because of a horrible natural disaster are swiftly prosecuted.”
According to AAA, gas prices have, in less than a week, jumped by as much as 60 cents a gallon and on average, gasoline is 50 percent more expensive than it was last year. If the cost of gas were to stay at $3 a gallon New Yorkers will spend $3,305,556,000 on gas in the next calendar year versus $2,343,639,204 at September 2000r4 prices for an increase of $961,916,796 or almost 1 billion dollars. The average vehicle in NYC will cost the owner $548.41 in extra gas prices if they don’t come down.
Schumer and Corzine also released a survey of gas prices in the metropolitan New York and New Jersey Area. The survey, which was done over the weekend, showed a wide range of prices for a tank of regular gas both borough by borough, within New York, within New Jersey, and across the metropolitan area. In Queens for example, prices differed as much as 76 cents between one of the higher prices stations and one of the lower priced stations. In Brooklyn prices differed by 80 cents. In northern New Jersey, the widest disparity in gas prices was about 44 cents. The survey is attached.
Though some of the increase in gas prices can be attributed to the interruption in oil and refined gas supplies, and the uncertainties of such an unprecedented and unpredictable event as Hurricane Katrina, the Senators expressed fear that some of the fluctuation and inconsistencies in gas prices are a result of price gouging at the pump. They called on the FTC to launch a top-to-bottom investigation to make sure that oil companies and gas station owners and the pipeline in between them are operating ethically and within the law.
Though the Federal Trade Commission already monitors gas prices and investigates possible antitrust violations in the petroleum industry, Schumer and Corzine called for immediate formation of a task force to promptly identify the many cases of price gouging being reported across the country, and asked that the task force formulate a process by which price gougers are swiftly prosecuted.
Across the Northeast, gas prices have surged from pre-Katrina levels. Market forces have certainly played a role in these prices, but the variety of prices at gas stations and the fact that profits continue to flow to big oil indicate improper pricing. There are currently no federal laws that specifically address price gouging. The state laws that do exist regarding price gouging are usually only triggered in situations arising from a declared emergency. Schumer and Corzine, in a letter to the FTC asked for the Commission’s recommendations on the most effective way to strengthen the federal government’s authority in this area.
In a letter to FTC Commissioner Deborah Platt Majoras Schumer and Corzine wrote, “Even before the devastation of Hurricane Katrina, surging gas prices were already a salient issue for the American consumer. Now, with an energy crisis looming, the topic has become even more critical, and Americans are reaching ever deeper into their pockets for this necessary commodity. We fear that some of the fluctuation and inconsistencies in gas prices are a result of price gouging at the pump. Price gouging must not be tolerated and we must do more to make sure that oil companies and gas station owners are operating ethically and within the law, especially in the wake of this disaster.”