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Wisconsin Governor, Seven Others Demand Oil Companies Refund Drivers

Posted on: Tuesday, 20 September 2005, 21:00 CDT

Sep. 21--MADISON -- Gov. Jim Doyle demanded Tuesday that oil companies refund Wisconsin drivers $88 million, saying the firms gouged consumers in the wake of Hurricane Katrina.

Doyle and seven other Democratic governors sent President Bush and congressional leaders a letter asking them to order oil companies to return "excessive, ill-gotten profits" to consumers, and to conduct a nationwide investigation of gas prices.

"To price-gouge consumers under normal circumstances, that's dishonest enough," Doyle said. "But to make money off the misery of others is downright immoral."

Doyle cited a recent study by University of Wisconsin-Madison economist Don Nichols that concluded the recent gas spike was not primarily caused by the hurricane because prices at the pump have risen much faster than the price of crude oil.

Doyle said that Wisconsin drivers have been overcharged $88 million for gas this month.

Erin Roth, executive director of the Wisconsin Petroleum Council, said 40 state and federal investigations over the past decade have found no signs that major oil companies unfairly nicked consumers.

Prices were rising before Katrina because of increased demand, Roth said. Then Katrina strangled supply, and panic buying sent prices higher.

Doyle was too hasty in demanding refunds, he said.

"He wanted the check now, but didn't provide any evidence -- any clear evidence -- of price manipulation," Roth said.

Prices in the Milwaukee area were $2.67 to $2.99 a gallon Tuesday, according to www.milwaukeegasprices.com . But Roth warned prices could spike again if Hurricane Rita batters the Gulf Coast.

Citing Nichols' study, Doyle said he believed companies were unnecessarily hitting customers for extra cash, though he added he did not believe retailers were at fault.

"When prices go up 60 cents in a day or two, somebody's making a lot of money," Doyle said.

In the report issued Friday, Nichols said Katrina had not caused crude oil prices to surge, despite disrupting some supplies. Yet gas prices have soared in recent weeks, he noted.

The increases likely are temporary, Nichols says in his report. He makes no claim of price gouging.

Attorney General Peg Lautenschlager and the attorneys general of Iowa and Illinois already are investigating whether oil companies gouged customers in the wake of Hurricane Katrina. She has said a wide-ranging federal investigation is needed.

There is no state law against price gouging, but Sen. Dave Hansen (D-Green Bay) and Rep. Josh Zepnick (D-Milwaukee) unveiled legislation Tuesday that would change that. Lautenschlager and Doyle support the bill, but Senate Majority Leader Dale Schultz (R-Richland Center) said he feared the measure would interfere with the free market.

The bill would apply to most goods and services, not just gas. It would bar companies from charging prices that "grossly exceed" the average price of those goods over the past 12 months.

Milwaukee County Executive Scott Walker and U.S. Rep. Mark Green of Green Bay, the two Republicans running against Doyle, said they supported making price gouging illegal, though they did not specifically endorse the Democratic bill.

Green said Doyle's request for a federal investigation was unwarranted because the federal energy bill that was passed before Katrina hit requires the Federal Trade Commission to study whether gas prices are artificially high.

Walker said the best way to cut the price of gas is to ensure gas taxes are not diverted from road projects, as Doyle has done. If the transportation fund is kept whole, Walker said, state officials may be able to cut the gas tax or end annual inflationary adjustments to the tax.

Senate Republican leaders agreed Tuesday to schedule a Sept. 26 public hearing on a bill that would cancel those inflationary increases.

Wisconsin's gas tax, one of the highest in the nation, is 32.9 cents per gallon.

Also signing the letter sent by Doyle were New Mexico Gov. Bill Richardson, Michigan Gov. Jennifer Granholm, Iowa Gov. Tom Vilsack, Oregon Gov. Ted Kulongoski, Montana Gov. Brian Schweitzer, Illinois Gov. Rod Blagojevich and Washington Gov. Christine Gregoire.

Steven Walters and Avrum D. Lank of the Journal Sentinel staff contributed to this report.

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Source: The Milwaukee Journal Sentinel

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