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Public Statements

MSNBC "The Rachel Maddow Show" - Transcript

Interview

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MADDOW: Everybody knows how supply and demand works. But in this case, if
supply and demand do not explain what was going on here, that`s a scandal
that had a huge economic impact.

Were the companies lying about this just to boost prices up and pocket the difference? Does this happen all over the country? What`s going on here? And what tools do we have to figure it out if we`re being suckered? It turns out we do have a tool. It lives in the Department of Justice. Six Western senators are calling on the Department of Justice to conduct a refinery by refinery investigation of what happened during that gas price spike in May. And another one that happened in October. Is the energy industry snookering us and will they get caught if they are?

Joining us for the interview is Senator Maria Cantwell from Washington state. She`s chair of the Senate Subcommittee on Energy. She`s been leading the charge for calling for this investigation here. Senator Cantwell, it`s nice to have you here. Thank you for joining us.

SEN. MARIA CANTWELL (D), CALIFORNIA: Good evening, Rachel.

MADDOW: Let me ask in my layman`s summary of that discussion, both the supply and demand factors at work, but also what might have happened around may they get the basics of that right? Is that basically the situation?

CANTWELL: Rachel, I`m convinced that Maddow matters, that you drill down on the substance of these issues and that`s exactly what we need the Department of Justice to do.

MADDOW: What was it about the price spike in May and then again in October that seemed suspicious to you? Is there something that tipped you off to start questioning whether or not that was a legitimate price spike just explained by supply and demand?

CANTWELL: Well, my constituents tipped me off that they were frustrated gas was going towards $5. What they knew is that one refinery went down, but why was everybody else saying that they were offline or a lot of the market response basically saying the price spike was caused by a shortage?

Well, you outlined how inventories and supply were there. So, supply and demand didn`t seem to really be the issue. So our question is this: did these entities create the perception of an artificial shortage and thereby drive up the price of gasoline? That`s what we want the Department of Justice to investigate. We want the FTC and the Department of Justice to be the policeman on the beat on something so important as gas.

As you said, it`s like the lifeline of an economy. If you affect it by that price spike, it really does affect day to day consumers and our economy and jobs and everything else.

MADDOW: Do you believe that the Department of Justice is capable of mounting this investigation in a rigorous way? That they have the tools that they need? Do they have a track record of investigating stuff like this well?

CANTWELL: Do they have the tools they need. Why we`re asking the Department of Justice to be involved now, in addition to the FTC, is that the investigative arm of the Department of Justice can marry up with the regulatory authorities in agencies like the Commodities Future Trading Commission have or other agencies and do a comprehensive approach to get all the data.

And, yes, this task force existed before when it tried to tackle the Enron problem. Another area of energy, electricity, but an area where we saw a lot of the same schemes being perpetrated on the public, you know, by people moving supply around or creating images about supply that really weren`t true.

And in this case, it appears that there`s some evidence that we want them to investigate. The fact that while they said they were down, emissions were coming out of these facilities, which would lead you to believe they were actually producing supply.

MADDOW: We contacted the Western States Petroleum Association today to get their response to this, to the McClatchy report and also to this call for the investigation. They told us, "If the Department of Justice or any other agency elects to investigate gas markets on the West Coast, we`re confident the investigation will reach the same conclusion that dozens of other investigations over the past few decades have reached that gasoline and diesel prices in the West Coast are determined principally by supply and demand."

They also said the author of the report, who I cited here, they said that he is not an expert in the oil industry and clearly does not understand refinery operations. His report contains many suspicions and theories, but doesn`t prove anything. Let me get your response to that remark from the Western States
Petroleum Association.
CANTWELL: Well, there`s a lot to cover there and let me just say this -- that there is a new law on the books of the last few years that basically says that it is against the law to have any manipulative devices or contrivances as it relates to moving oil supply.

This is a relatively new statute. It`s not the issue of whether the oil companies got together in an antitrust conspiracy to set pricing. This is about whether somebody, as I was saying before, created the image of an artificial shortage just to drive up price.

And the reason why that law was passed is because we saw too much going on in our energy markets -- something that`s so critical to our economy -- that we wanted to have a tougher regulation on the books. So this authority has been used in electricity and natural gas and a federal agency overseeing those entities have instigated over 100 -- I think 107 cases and have had hundreds of millions of dollars of fines against companies who have had bad practices.

So, we`re asking that the FTC and DOJ use the power that`s in statute, although relatively new to do that kind of policing in these energy markets.

And to Mr. McCullough in Oregon, we couldn`t thank him enough in the Northwest, because when the federal entities in charge of electricity failed to investigate fully the Enron case, Mr. McCullough provided crucial evidence by investigating tapes and documentation on behalf of our utilities in the Northwest that proved successful in saving our consumers over $1 billion.

So I could tell you, he`s done great work before. And he`s a first to admit that what we really need now is the Department of Justice to use their full power and get to the bottom of this.

MADDOW: Senator Cantwell from Washington state, chair of the Senate Subcommittee on Energy -- thank you for helping us to understand this. Please keep us apprised as this goes forward. I really appreciate it.

CANTWELL: Thank you, Rachel.

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