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Time to Take the Incentives out of Price-Gouging by the Oil Companies

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Date:
Location: Washington, DC


TIME TO TAKE THE INCENTIVES OUT OF PRICE-GOUGING BY THE OIL COMPANIES -- (House of Representatives - October 26, 2005)

The SPEAKER pro tempore (Mr. Gingrey). Under a previous order of the House, the gentleman from Oregon (Mr. DeFazio) is recognized for 5 minutes.

Mr. DeFAZIO. Mr. Speaker, yesterday, we saw an extraordinary event: The Republican leadership of Congress asking, pretty please, if the oil industry would build more refineries.

Now, of course, this flies in the face of the strategy of the oil industry and everything that has been done in the so-called energy bills we have passed so far, which is providing incentives, tax subsidies, and status quo to the oil and gas industry. In fact, in the last 10 years, the oil industry, through mergers, has managed to close half of the refineries in America. And now today, when we see extortion in prices for gas at the pump, and we say, why is that? And they say, we do not have enough refineries. And then they say, those darn environmentalists. But they do not put it in the same sentence, because they know it is not true. Not a single refinery was closed for environmental reasons.

They have not applied to build new refineries. They, in fact, have consciously closed refineries and squeezed down refinery capacity, so like Enron in California, when they shut down their generating plants, they can say, oh, the price has got to go up. We do not have enough of the product out there.

In fact, if you look at where consumers' money is going, if you take gas at $2.50 a gallon, about 95 cents of that is going to the refiners. That is up from the historic average of 27 cents, a 400 percent increase in profits to refiners, which is adding up to a wonderful bottom line for the oil companies. Today Conoco-Phillips announced that their profits are up 89 percent over this quarter last year, $3.8 billion in the third quarter. Not bad. BP, kind of a piker here, probably their stock will go down; their profits only went up 34 percent. What Americans' wages went up 34 percent, except maybe some of the CEOs of these companies, $6.53 billion?

But Exxon Mobil, the big one, will announce tomorrow, and it is widely expected among analysts, that they will report third quarter profits, one quarter, that is 3 months, of nearly $9 billion, which will be the largest quarterly profit for any corporation in the history of the world, and there is no price gouging going on.

Now, one part of that sentence was true, and the other part was a lie. The first part was true: The largest ever quarterly profit in the history of the world will go to Exxon Mobil, who has closed dozens of refineries, and then they say, well, we do not have enough capacity. The Republican leadership says, pretty please, might you build more refineries?

Now, the oil industry is getting a little worried because the American people are kind of onto this game. We saw over three bucks a gallon on the west coast on Labor Day weekend, but guess what? We are not in the east coast supply chain. Now, what justified that, except for price gouging and profit-taking, which did contribute to the largest ever quarterly profit for a corporation in the history of the world? Oregonians and other Westerners contributed to that, or were extorted to contribute to that?

And the industry is starting to get a little worried that maybe some meaningful action might happen, but they do not have to worry, because we have two oilmen in the White House, and we have a Republican leadership in Congress that says, pretty please, would you please do something about this, and you better not price gouge anybody.

In fact, the so-called energy bill we passed just about 10 days ago, energy bill II, all the bad ideas that did not fit into energy bill I, actually would have penalties for price gouging. But they could not be applied to refiners whose profits are up 400 percent, or to producers, crude oil producers, whose profits are up 50 percent, or even to distributors, but to retailers whose profits are up 2 percent.

Now, it is not the Mom and Pop gas station that is gouging the consumers. They are at the end of the chain. They get the gas; they get a tiny little markup. They are not the ones manipulating the system.

It is time to break up these energy cartels, no more mergers, break up some of these megacompanies that have been created, apply a windfall profits tax to take the incentive out of price gouging, adopt meaningful price gouging legislation like 23 States in the Union have; do that nationally to reign this in, go after OPEC and their restriction of supply in violation of WTO.

The President is a great free trader until it comes to OPEC, because he could file a free trade complaint about them, but he will not. I have written to him. I have asked him. I have introduced legislation. They will not hear it; they will not let us vote on it. Nobody wants to take on OPEC, because they are working hand in glove with Exxon Mobil and the big oil companies. They are all getting really rich together, and the American consumers are getting taken to the cleaners.

Short term we could save tens of billions of dollars for American industry, business, consumers, and others, and then long term we need an energy policy in America, something that has not happened in 5 years, even with Dick Cheney's secret meetings at the beginning of his term as Vice President. What we have is more subsidies for the oil, coal, and gas industry instead of a visionary energy policy that will get us new fuels, new technologies for the future, and make us energy-independent and efficient.

http://thomas.loc.gov

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