Attorney General Jack Conway (D-Louisville) announces his investigation into Louisville's gas prices on Thursday: Politicker photo
LOUISVILLE -- At a joint press conference in Louisville today - where gas costs up to 30 cents more per gallon than in the rest of the Commonwealth - U.S. Rep John Yarmuth (D-Louisville) and state Attorney General Jack Conway (D-Louisville) elaborated on their newest proposals for confronting the energy dilemma.
In front of reporters gathered in a cul-de-sac near a noisy highway on-ramp, Yarmuth said he was pressuring President Bush to permit the usage of emergency provisions he argued would decrease speculation in the oil market. Conway, on the other hand, announced an investigation into potential anti-competitive activity by gas retailers and wholesalers leading to the price disparities between Louisville and other parts of the state.
Touting a letter he sent to President Bush on Wednesday, Yarmuth said a provision enacted by Congress in 2000 - termed the "Enron loophole" - exempted energy speculators from federal regulation and allowed speculators in the oil market to drive prices up.
"We are in the mode where the fundamentals of supply and demand don't really drive the price," said Yarmuth.
Attorney General Jack Conway (D-Louisville) announces his investigation into Louisville's gas prices on Thursday: Politicker photo
LOUISVILLE -- At a joint press conference in Louisville today - where gas costs up to 30 cents more per gallon than in the rest of the Commonwealth - U.S. Rep John Yarmuth (D-Louisville) and state Attorney General Jack Conway (D-Louisville) elaborated on their newest proposals for confronting the energy dilemma.
In front of reporters gathered in a cul-de-sac near a noisy highway on-ramp, Yarmuth said he was pressuring President Bush to permit the usage of emergency provisions he argued would decrease speculation in the oil market. Conway, on the other hand, announced an investigation into potential anti-competitive activity by gas retailers and wholesalers leading to the price disparities between Louisville and other parts of the state.
Touting a letter he sent to President Bush on Wednesday, Yarmuth said a provision enacted by Congress in 2000 - termed the "Enron loophole" - exempted energy speculators from federal regulation and allowed speculators in the oil market to drive prices up.
"We are in the mode where the fundamentals of supply and demand don't really drive the price," said Yarmuth.
The freshman Congressman pointed to recent Congressional testimony to suggest unchecked speculation may be responsible for up to 50 percent of the "inflated cost of oil.
In his letter to Bush, Yarmuth asked the President to direct the Commodities Futures Trading Commission to use "emergency authority" it is allocated in the Commodity Exchange Act to reverse the impact of speculation.
"There are safeguards - they just aren't being implemented," said Yarmuth with regard to the CFTC's potential.
"They have the authority to immediately restrict actions of futures traders, restore order to market, and ensure that prices bear some reasonable relation to supply and demand - but they aren't doing it," said Yarmuth.
Yarmuth argued stopping speculation could provide more immediate relief than expanded domestic drilling - the principal plank of the energy plan of his 2008 opponent in the 3rd Congressional District, former U.S. Rep Anne Northup (R-Louisville).
"The American people need help today," added Yarmuth. "Regulating commodities trading is potentially the most effectively tool we have to dramatically decrease gas prices in the short term."
If Bush does not act on the CFTC provisions per his letter's suggestions, Yarmuth said "we are going to act anyway." He noted Congressional Democrats were in the process of consolidating several different bills that would "change the rules" on oil speculation.
Claiming domestic speculation was not the only problem, Yarmuth also called on Bush to encourage a "crackdown" on global speculation at next week's G-8 summit in Tokyo.
U.S. Rep John Yarmuth (D-Louisville) at Thursday's press conference in Louisville: Politicker photo
Conway's approach
Meanwhile, at the same press conference, Conway announced an entirely different approach to Louisville's own specific gas price woes, launching an investigation into what his office termed "abnormally high" gas prices in Kentucky's largest city.
"There doesn't seem to be a simple answer for why the Louisville market is exceeding the rest of the state and exceeding some of our competitor cities by so much," said Conway.
"We are suspicious," he added.
The preliminary stages of the investigation will involve Conway's office "seeking answers from both retailers and wholesalers," according to the Attorney General. That information will be compared with market trends to determine if any "anti-competitive" activity contributed to the disproportionate prices in Louisville.
"If they don't voluntarily work with us - and if we suspect collusion or any market fixing - we have the ability under the Consumer Protection Act to compel information from them," noted Conway.
The Attorney General also noted he believed price differences were not solely attributable to the fact that Louisville retailers are required to sell reformulated gas (RFG) - a fuel blended to burn with less pollutants - due to an air-quality standards set in an agreement with the federal Environmental Protection Agency.
"Something extraordinary is going on here in the Louisville market," said Conway. "You can't just explain this type of price differential simply by RFG."
"St. Louis must also use RFG and retail prices there are averaging $3.80 to $3.90 per gallon," read a release from Conway's office, which also noted a Louisville average of $4.30.
Conway said he hoped his office would have compiled sufficient information within the next 15 to 30 days.
If "anti-competitive activity" can be proved, Conway said one option for his office would be to seek restitution from wholesalers and retailers operating in area around Louisville.
"If the people of Jefferson County have paid 30 cents more per gallon than they should have been paying, then they are owed some sort of restitution," said Conway. "We would not shy away from taking that action in trying to find the appropriate restitution."
