Letter To Federal Trade Commission Chairman Deborah Platt Majoras

Letter

Letter To Federal Trade Commission Chairman Deborah Platt Majoras

Senator Jim Webb today called on the Federal Trade Commission (FTC) to improve its enforcement of anti-competitive practices within the petroleum industry and report steps it is taking to reverse the spiraling increases in the price of gasoline.

In a letter dated Friday, May 25 to FTC Chairman Deborah Majoras, Senator Webb writes: "I am concerned that the very situation the FTC is charged with preventing, less competition resulting in higher prices for consumers, now characterizes the petroleum industry."

Webb's letter comes on the heels of a Joint Economic Committee Hearing on Wednesday, exploring whether market concentration in the U.S. petroleum industry is harming consumers.

"We have not experienced a Memorial Day weekend since 1981 that has hit our wallets harder in terms of gas prices. While the industry enjoys record profits with the consolidation of the nation's top five oil companies, families are experiencing skyrocketing gas prices," said Webb.

"These five oil companies have made $375 billion in profits since 2001, and made $120 billion in profits in 2006 alone. ExxonMobil's revenue of $377.6 billion last year surpassed the gross domestic product of all but 25 countries," continued Webb. "We need to aggressively monitor the anti-competitive practices at play here. And, the FTC should show us how it intends to curb these spiraling gas costs."

A copy of the letter follows:

May 25, 2007

The Honorable Deborah Platt Majoras

Chairman

Federal Trade Commission

Room H-135 (Annex B)

600 Pennsylvania Avenue, N.W. Washington, D.C. 20580

Dear Chairman Majoras:

I am writing to express my concern regarding the Federal Trade Commission's (FTC) enforcement of U.S. antitrust laws. On Wednesday of this week the U.S. Senate Joint Economic Committee held a hearing concerning consolidation in the petroleum industry, during which the FTC presented its views. The issues raised during our hearing Wednesday require far more analysis and explanation given the record high gas prices now facing American families and business.

As the FTC itself notes, your agency's mission includes the duty to challenge mergers that would likely lead to higher prices. You are also charged with the obligation to promote competition in industries where the consumer impact is high, such as the petroleum industry.

The petroleum industry, however, has consolidated into five major companies, with the approval of the FTC. Working families are experiencing this consolidation in the form of skyrocketing gas prices while the industry enjoys record profits. These five oil companies have made $375 billion in profits since 2001, and made $120 billion in profits in 2006 alone. ExxonMobil's revenue of $377.6 billion last year surpassed the gross domestic product of all but 25 countries.

Meanwhile, American families are paying approximately $1,000 more for gas per year than they did five years ago. This figure will only increase. I am concerned that the very situation the FTC is charged with preventing, less competition resulting in higher prices for consumers, now characterizes the petroleum industry.

My concerns are borne out by testimony from the U.S. Government Accountability Office (GAO). The GAO reported that mergers in the U.S. petroleum industry contributed to increased market concentration in U.S. refining and marketing portions of the industry. The GAO's analysis demonstrated that industry mergers resulted in higher wholesale gasoline prices.

Given the crisis working families face as a result of rising gasoline prices, I urge the FTC to more aggressively review proposed petroleum mergers and to undertake an investigation into anticompetitive practices by the petroleum industry. I would appreciate an explanation of any actions that your agency has taken - or expects to take - to reverse these spiraling increases in the price of gasoline.

Sincerely,

Senator Jim Webb

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