Hearing of the Senate Judiciary Committee on "Consolidation in the Oil and Gas Industry: Raising Prices?"

Hearing of the Senate Judiciary Committee on "Consolidation in the Oil and Gas Industry: Raising Prices?"

REMARKS [AS PREPARED]: JUDICIARY COMMITTEE HEARING: "Consolidation in the Oil and Gas Industry: Raising Prices?"

Mr. Chairman, thank you for calling for this important hearing today; I'm glad that we have representatives of the oil industry here today to discuss this critical question: What is causing the high fuel prices that we are all so sick of paying?

Everybody comes to Congress and says that there's nothing wrong in the industry -- that the market is functioning normally. Yet, my constituents in Ohio feel that there's something wrong when they are paying record prices at the pump, while oil companies are making record profits.

One of the causes of the skyrocketing gas prices certainly could be the mergers in the oil industries. Did the FTC allow too many oil industry mergers? Are the antitrust laws up to the challenge of dealing with the modern energy market? Should the antitrust agencies take a more aggressive approach in this market?

I think it's clear that the agencies need to take a very hard look at any future mergers in this industry. And, they should examine their past enforcement actions. Senator Kohl and I have worked hard in our Antitrust Subcommittee to encourage FTC monitoring and enforcement, and I'm pleased that the Committee is considering your draft legislation, Mr. Chairman, which includes a provision that Senator Kohl and I have pursued since 2000. That provision contains the language from our NOPEC bill, which the Senate passed last year.

The biggest thing we can do to control gas prices in the future is to lower crude oil prices, and one of the biggest causes of high crude oil prices is the illegal price-fixing of the OPEC cartel. Our NOPEC language makes it clear that the Antitrust Division can prosecute OPEC for its illegal activities. America needs NOPEC as an effective tool to hold down prices.

The Chairman's draft legislation also addresses a concern some have expressed that certain oil companies may have acted to manipulate supply and requires a very important study of the legal standards for mergers and also of industry data-sharing. I think this information would be very useful as we figure out what we can do to combat high energy costs, and I look forward to discussing this draft legislation today.

Mr. Chairman, just to put this issue into historical context, I think it is interesting to remember that one of the first big antitrust cases ever prosecuted was the famous Standard Oil case, and that case established most of the fundamental principles of antitrust law that continue to this day. One of those principles -- to put it in everyday terms -- is this: It isn't illegal just to be big, and in fact, it's even legal to be a monopoly. What is not legal is when a company abuses its size or uses unfair tactics to shut out its competitors or harm competition. As we examine the impact of mergers in the oil industry today, we should remember that we need to evaluate the conduct of these companies, not just the fact that they have grown in recent years.

It goes without saying, Mr. Chairman, nobody is satisfied with the way this market is behaving, and none of us is happy with the high gas prices we are paying. So, we do need to keep looking at the conduct of this industry and the role of the antitrust laws, and we need to keep looking very carefully. And most important, we need to find some way -- any way -- to help our citizens and businesses as we all struggle with increasing energy prices. We owe it to the American people, and we owe it to our constituents at home.

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