The Federal Trade Commission has opened a formal investigation into soaring gasoline prices in some areas of the Midwest and will begin issuing subpoenas to oil companies by the end of the week, congressional sources said Tuesday.
FTC Chairman Robert Pitofsky told some members of the Illinois congressional delegation that sudden price spikes in Chicago, Milwaukee and elsewhere are "sufficiently questionable" to warrant formal investigation into possible price gouging and collusion, according to one lawmaker present.
"The fact that they're moving forward with this investigation will be a clear signal to the oil companies to bring down prices immediately," said Sen. Richard Durbin, D-Ill., who was among those who met with Pitofsky on Capitol Hill.
At the request of the Clinton administration, the FTC for the past week has been conducting an informal inquiry into steep gasoline price increases in the Midwest. Until now, the agency's actions amounted to informal fact-finding, with no threat of subpoenas or requirement for companies to cooperate.
Durbin said Pitofsky told him and other Illinois lawmakers that the agency will pursue a formal investigation and begin issuing subpoenas by the end of the week to companies connected with the refining, distribution and sale of gasoline.
Vice President Al Gore, citing reports of huge profits by the oil companies this year, told a group of reporters that "the circumstances clearly warrant a broadened investigation to see if there is collusion." While Gore indicated that he would like to see the FTC probe focus beyond the Midwest, indications were that the agency at least initially would confine its investigation to the Chicago-Milwaukee corridor, where prices have soared well beyond $2 a gallon.
Texas Gov. George W. Bush, a former oil man now running for president, stepped carefully around the price-gouging issue.
"I think it's important to find out whether it's true or not," he said. "I'd like to know all of the facts."
Pitofsky was unavailable for comment. FTC offices were closed for the day.
While Durbin and some other Democrats hailed the FTC decision to pursue the matter, Sen. Peter Fitzgerald, R-Ill., questioned whether the agency has enough evidence to start a formal investigation.
Industry executives have criticized suggestions that companies are in collusion or gouging customers. They blame price increases on market conditions, tight supplies, transportation problems and complications in refining newly required cleaner-burning gasoline.
Gore asked EPA Administrator Carol Browner and Energy Secretary Bill Richardson to meet with the governors of states most affected by high pump prices, including those from Illinois, Wisconsin and Michigan, to see how gas price problems might be eased. Several governors have urged the EPA to lift new requirements for cleaner gasoline.
Oil analysts anticipated only modest increases in oil production by the OPEC nations meeting today and predict that any action will fall short of what is needed to drive down gas prices. The administration was quietly trying to persuade OPEC oil ministers to increase crude oil production at the meeting in Vienna, Austria.
The Energy Department's weekly survey showed the cost of gasoline nationally increased 5 cents a gallon from last week to $1.68, a record high for a fourth week in a row.
"There is gouging on the part of the large oil companies," insisted Senate Democratic Leader Tom Daschle of South Dakota. He and Rep. Richard Gephardt of Missouri, the top Democrat in the House, met with President Clinton last week to emphasize "the seriousness of the matter," Daschle said.
The two leading Democrats reportedly raised concerns that if gasoline prices are not reined in, it could mean trouble for both Gore's presidential bid and Democratic efforts to regain control of the House in November.
Republicans have lost no time in trying to tar the administration, the Environmental Protection Agency and Richardson -- already under attack because of security problems at the Los Alamos nuclear weapons lab -- for the gasoline price surge.
House Speaker J. Dennis Hastert, R-Ill., said the EPA, in areas hit by major price increases, should lift its requirement to use cleaner gasoline. "Working families are bearing the brunt of the EPA's inaction," he said.
Rep. Dan Burton, R-Ind., chairman of the House Government Reform Committee, scheduled a hearing next week on the administration's response to rising gas prices and asked Richardson, Browner and Pitofsky to testify.