GOP wants gas prices investigated
By STEVEN MUFSON and TIMOTHY DWYER

Washington Post
4/22/2006

WASHINGTON - Republican congressional leaders made plans Friday to ask President Bush to order investigations into possible price gouging by oil companies as crude oil prices hit new highs on world markets and average gasoline prices in the nation's capital blew through the $3-a-gallon mark.

House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., are preparing to send a letter to the president Monday asking him to direct the Federal Trade Commission and Justice Department to investigate price gouging and instruct the Environmental Protection Agency to issue waivers that might make it easier for oil refiners to produce adequate gasoline supplies, Hastert spokesman Ron Bonjean said.

Hastert and Frist's letter comes amid charges by some consumer groups and Democrats that oil companies have manipulated refineries and oil inventories to drive up prices. Hastert also took aim at the rich pay package for Exxon Mobil Corp.'s retired chief executive, which he called "unconscionable."

On Friday oil prices climbed to a new record, unadjusted for inflation, with benchmark crude rising $1.48 to settle at $75.17 a barrel on the New York Mercantile Exchange.

Democrats have been criticizing the administration as well as the oil companies for failing to take action to dampen the surge in prices, which have risen more than 40 cents a gallon in the Washington area and elsewhere in the past month.

The average cost of a gallon of regular unleaded gasoline in the Buffalo Niagara market was $2.913, according to the Automobile Association of America's Daily Fuel Gauge Report. Several area stations have surpassed the $3 per gallon mark, however.

As pump prices rise, they threaten to cramp consumer spending. "High energy prices - including prices at the pump - act like a tax on the American economy," Treasury Secretary John Snow said Friday as finance ministers from around the world gathered in Washington for meetings of the World Bank and the International Monetary Fund.

During a California visit, Bush echoed Snow's comments.

"I know the folks here are suffering at the gas pump," the president said while promoting his competitiveness initiative at the Silicon Valley headquarters of Internet networking company Cisco Systems Inc. "Rising gasoline prices is like taking a - is like a tax, particularly on the working people and the small-business people."

A House GOP leadership aide said that Hastert also responded to calls for hearings into the pay package for Lee Raymond, who retired as Exxon Mobil's chief executive in January.

According to a recent proxy filing by the company, Raymond received $48.5 million in salary, bonuses and incentive payments last year, exercised more than $20 million in stock options in 2005, and in January received a lump-sum retirement payment of $98.5 million. The proxy said that after 43 years of service, Raymond had accumulated $183 million of stock holdings plus stock options worth a net of about $69 million at current stock prices.

"The speaker is very concerned about compensation packages given to executives like Raymond at a time when families are facing choices between putting food on the table and filling their car with gasoline," said Bonjean. "We met with Exxon Mobil and several companies last fall and it seems that the message hasn't gotten through." Exxon had said that Raymond's package was in keeping with his performance as chief executive over the past 12 years, when the company's earnings soared to record levels.

Adding to the energy woes, fuel distributors say they're facing logistical challenges as terminal owners drain their tanks of gasoline laced with MTBE (methyl tertiary-butyl ether), an additive that used to account for 200,000 barrels a day of U.S. supply but which has been banned for environmental and health reasons.

Tanks in much of the country must be prepared for the switch to ethanol blends, as required by the Energy Policy Act of 2005.

Scattered gas stations from New Hampshire to Virginia are facing temporary shortages as the industry grapples with the transition to more ethanol-blended fuel.

Analysts and industry officials said occasional shortages are possible for another few weeks, though they emphasized that the problem has more to do with delivery schedules than a dearth of fuel. The Northeast - with the exception of New York and Connecticut, which switched to ethanol last year - and Texas are the two regions most affected by the switch because of their heavy use of MTBE-blended gasoline.

The Associated Press contributed to this report.

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