SENATOR BOXER WORKS TO STOP RISING GAS PRICES

Thursday, March 11, 2004

Washington, D.C.- U.S. Senator Barbara Boxer (D-CA) today met with Federal Trade Commission Chairman Timothy Muris to discuss the sharp rise in gasoline prices in California.

On February 24, 2004, Boxer sent a letter to Chairman Muris asking him to investigate the rise in gasoline prices for possible market manipulation. At that time, California gasoline prices had increased 16.1 cents in a week, compared to 4 cents nationally.

As of Wednesday, March 10, the average price of a gallon of unleaded gasoline in California is $2.11 per gallon, compared to $1.82 a month ago.

The following are excerpts of Senator Boxer's remarks following her meeting:

"The FTC agrees that there is an anomaly in California prices. In English, that means that the prices are going up faster than the factors that FTC uses to predict normal prices would indicate.

They (FTC) have started an informal investigation, which pleases me very much. Why have they done this? Because so far they cannot explain this phenomenon.

Right now they are in the early stages of this informal investigation, and I am today urging people in California to please contact us, or contact the FTC, or contact California Attorney General Bill Lockyer, and please let us know if there is any reason to believe that refineries are being taken off line unnecessarily, or there is collusion going on in any way.

Of course I want a full blown investigation, I want a formal investigation- but I'm here to say that the FTC is in the process of an informal investigation, and to me there is a lot of hope that they have found this to be an anomaly."

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9-POINT PLAN TO FIGHT RISING GAS PRICES

1. FTC Investigation of Current Situation

First, I have called on the Federal Trade Commission to investigate the current gas price spikes in California, which began in mid-February. I have met with the Chairman of the FTC, who confirmed that there was an "anomaly" in California's gasoline market and that the FTC was conducting an informal investigation.

2. Automatic Investigations of Rapid Price Increases

Second, I have introduced legislation that would require an automatic investigation of the gasoline market for possible manipulation any time that average gasoline prices in a state increase by 20% or more over a three-month period. If the FTC finds market manipulation in a given case, they would work with the state's Attorney General to determine penalties to be imposed on the companies.

3. "Cease and Desist" Orders in Highly Concentrated Markets

I am cosponsoring the Gasoline Free Market Competition Act authored by Senator Wyden, which would give the FTC the authority to issue "cease and desist" orders in order to prevent market manipulation whenever four or fewer gasoline companies control more than 70 percent of the gas supply in a given market.

4. Strategic Petroleum Reserve

We need to stop filling the Strategic Petroleum Reserve - which is now at 93% of capacity - in order to increase the supply of gasoline on the market. We should also establish a short-term"exchange" in which some oil in the SPR is released immediately and refilled later, just as SPR reserves were released four years ago to ease the home heating oil crisis in the Northeast. It doesn't even make sound economic sense to buy gas for the reserve when prices are at a peak.

5. Increased Production by OPEC

I am cosponsoring a Senate resolution that calls on the President to work with OPEC to increase world crude oil supplies in order to achieve stable crude oil prices. President Bush should work with OPEC to increase supply.

6. Subject OPEC to U.S. Anti-Trust Laws

I am cosponsoring a bipartisan bill authored by Senator DeWine that would subject OPEC to the laws prohibiting collusion, market manipulation, and other anti-competitive behavior.

7. Save the Bakersfield Refinery

I have called on Shell Oil to find a buyer for its Bakersfield refinery and commit to keeping the refinery open until a buyer is found. I have also asked the FTC and Attorney General Bill Lockyer to use their powers to stop the refinery from closing. We cannot afford to lose any more California refinery capacity. If this refinery closes, it will only further stress an already tight California market.

8. Oxygenate Waiver

Along with Governor Schwarzenegger, Senator Feinstein, and California's bipartisan Congressional delegation, I have called on the EPA to grant California a waiver from the requirement that an oxygenate - MTBE or ethanol - be added to gasoline. Adding ethanol to gasoline may already be driving prices higher in some parts of the state.

9. Fuel Formula Investigation

We may be able to reduce price spikes by reducing the number of different fuel formulations now required by different jurisdictions. I have asked the General Accounting Office to investigate whether we can do this while maintaining the same air quality benefits that we get with California's cleaner-burning gasoline.