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Rep. Hyde Seeks FTC Probe of Gas Prices

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 producer source.

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.

Susan Parker

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