02.29.08

Statement On Oil Prices

In April 2004, when American consumers were paying $1.78 per gallon at the pump, I warned that energy experts were “predicting that the price of gas may rise to $2.50 or $3.00 per gallon.”  The administration did nothing.  Last October, when American consumers were paying $2.87 per gallon at the pump, I warned that “oil may be on its way to over $100 a barrel.”  The administration did nothing. 

This week, oil reached a record $102 a barrel, and gas prices averaged $3.13 a gallon.  How much will families in Vermont and across America have to pay to heat their homes in this long winter and drive to work before the President takes action?  At a news conference yesterday, the President was not even aware that some are predicting that gas prices will hit $3.50 or even $4.00 a gallon by the spring. 

Two facts are painfully clear:  Gasoline prices have more than doubled since the President took office, and the President has no plan to protect consumers and our economy. 

I have said this before, and I say it again today:  The principal cause of the relentless increase in oil prices is not a natural supply issue, but market manipulation by the Organization of Petroleum Exporting Countries (OPEC), an international cartel that limits the supply of oil to keep fuel prices high.  In January, the President’s best attempt to increase the supply of oil was to tell Saudi King Abdullah that “paying more for gasoline hurts some American families.”  Indeed it does, and I am pleased the administration acknowledges the effects of rising gas prices on Americans.  But Saudi Arabia is a founding member of OPEC, which has every incentive to limit output and keep prices artificially high.  The futility of going to an OPEC member and pleading for it to raise output is obvious; the President’s request that it increase supply is simply bewildering.

OPEC is scheduled to meet next week to consider output levels.  If such a meeting took place in almost any other context, the participants would likely be arrested for an illegal conspiracy in restraint of trade.  Yet the President stood in front of the King of the largest participant in the oil cartel and asked for relief, instead of demanding an end to this illegal activity. 

If the administration truly acknowledges the impact artificially high oil prices have on our Nation, it should join with me, Senator Kohl, and the 68 other United States Senators and 345 Members of the House of Representatives who have voted for NOPEC legislation, which would hold accountable certain oil producing nations for their collusive behavior that has artificially reduced the supply and inflated the price of fuel. 

Instead of pleading for help, the next time the President of the United States meets with members of a cartel, the President should explain that entities engaging in anticompetitive conduct that harms American consumers can expect investigation and prosecution. 

We cannot claim to be energy independent while we permit foreign governments to manipulate oil prices in an anticompetitive manner.  It is wrong to let members of OPEC off the hook just because their anticompetitive practices come with the seal of approval of national governments.

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David Carle: 202-224-3693