Rep. Hyde Seeks FTC Probe of Gas Prices
House Judiciary Committee Chairman Henry J. Hyde (R-IL), who
this summer asked the Federal Trade Commission to investigate
potential price gouging in the gasoline market, has now called on
the agency to investigate whether collusion by producers may have
triggered the escalation in natural gas prices.
In a letter last Tuesday to FTC Chairman Robert Pitofsky, Hyde
urged the agency to specifically investigate whether gas producers
may have illegally colluded to create the current shortage in
natural gas supply in order to drive up prices for the fuel.
"The press reports indicate that last year when prices were
lower, producers cut their production. That production cut has led
to the current shortage with corresponding higher prices. Such
production cuts could be a legitimate response to market forces. On
the other hand, if they were done collusively, they could violate
the antitrust laws," Hyde wrote in his Oct. 10 letter.
"I am making no accusations because I do not know all the
relevant facts. However, I do believe the situation calls for some
review," he said, urging the FTC to report its findings and
recommendations "as promptly as possible" to the Judiciary
Committee. "Consumers need to know whether or not producers and
utility companies deliberately diminished reserves of natural gas
in order to drive the price up," Hyde said in a prepared statement.
Gas producers believe Hyde is on a fishing expedition. "This
clearly has more political overtones than any merit. It doesn't
look by the letter [to the FTC] that Hyde has any concrete
evidence. But given the fact that gas prices are high, he's
probably looking for political cover from his constituents," said a
The Natural Gas Supply Association (NGSA), which represents
major producers, has been in contact with both the House Judiciary
Committee and the FTC about the matter. "This association will be
glad to respond to any questions the committee has of us," said
NGSA Vice President John Sharp.
In requesting the probe, Hyde said "industry sources are hinting
in press reports that natural gas used to heat millions of homes
may skyrocket as much as 90% in the month ahead.....I think we must
move quickly to find out if and why that is true."
In its "Winter Fuels Outlook: 2000-2001" issued earlier this
month, however, the Energy Information Administration (EIA)
projected a much more modest increase in residential gas prices in
the months ahead. It estimates delivered gas prices for residential
customers in the Midwest will rise on average by about 30% during
this winter heating season. As a result, a typical Midwest
household is likely to pay about $240 more for natural gas this
winter than it did last year, the Department of Energy (DOE) agency
said. Hyde's home state of Illinois is expected to be especially
hard hit by the higher gas prices this winter.
Hyde recalled that gasoline prices fell 30% in the Chicago area
after he requested an FTC probe of the market. He hopes the FTC
investigation of natural gas prices will send an equally important
signal to producers and utilities that federal regulators are
monitoring activity that might be considered anticompetitive.
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.