Consumers Advocates Letter Requesting Meeting With Bush
Dear President Bush:
We are writing you as consumer organizations concerned about how your administration’s energy policies are hurting American consumers, harming the economy and increasing the number of unemployed. Your year-long push towards war in Iraq has allowed oil companies and Wall Street speculators to reap unjust rewards, as the price of oil has nearly doubled in that time.
We request a meeting to discuss the steps that must be taken to secure America’s economic and energy security, and to ask that you initiate an investigation into the role U.S. oil company price gouging has had in contributing to high gasoline prices. We also ask that you order a cap on at-the-pump gas prices in the event of a war and inform us of your planned use of the Strategic Petroleum Reserve.
After the terrorist attacks of 9/11, the price of oil plummeted by nearly 40 percent in two months. But ever since the January 2002 State of the Union speech, where you included Iraq as an “axis of evil” country, oil prices have doubled to nearly $40/barrel — the highest level since the Gulf War.
These higher prices hit Americans three ways. First, psychological “sticker shock” shakes consumer confidence. In February, the Conference Board’s Consumer Confidence Index fell to its lowest point in nearly a decade, citing “rising oil prices” as one of the reasons.
Second, higher oil prices inflate gas prices for consumers and raise companies’ cost of doing business. This particularly affects low-income communities, who are acutely affected when gas prices rise.In addition, whatever costs businesses don’t absorb (through lower profits) are passed through to consumers by increasing prices for goods, which in turn increases the risk of inflation. The airline and trucking industries, along with family farms, have been hit particularly hard by the sharp increase in energy costs. High oil prices have deflated an already anemic economy and helped contribute to hundreds of thousands of additional American jobs lost this past year. At the same time, your administration has appropriated only $2 billion for low income home energy assistance — only 0.5% of the $365 billion military budget.
Third, higher oil prices transfers income from Americans to oil-exporting dictatorships like Saudi Arabia and Iraq. These two countries supply America with over 25 percent of our imports. Through the UN’s oil-for-food program, Iraq exports two million barrels of oil a day, including hundreds of thousands of barrels a day to the U.S., making Iraq the 6th largest supplier of crude to America. But Iraq has also been illegally shipping oil in violation of U.N. sanctions, using foreign governments and possibly U.S. oil companies as intermediaries. Your administration has taken no action to investigate the role of U.S. corporations or of our allies in the “war on terror” in these schemes.
U.S. oil companies are all too happy to receive the spoils of higher oil prices. A wave of mergers over the last few years has created giants — ExxonMobil, ChevronTexaco, ConocoPhillips — that dominate all sectors of the oil industry, from drilling to selling gas to consumers. As a result, the top five oil companies now control over 40 percent of all domestic production, half of the domestic oil refineries and over two-thirds of all gas stations, choking competition and allowing them to inflate gas prices on top of the global crude oil price. Indeed, the Federal Trade Commission concluded in 2001 that oil companies intentionally withheld gasoline from the Western U.S. market in order to increase prices. Because their control over the domestic market is even greater, the ability of these oil companies to manipulate prices has increased. In addition, these large oil companies continue to take advantage of the deregulated energy trading sector that allowed Enron to price gouge west coast electricity consumers. The same lack of transparency that Enron exploited is being exploited by ExxonMobil, ChevronTexaco and other oil companies with large positions in the unregulated Over-The-Counter energy derivatives market.
We wish to discuss why there needs to be a $2 cap on at-the-pump gasoline prices in the event of a war. Our nation’s economy is dependent upon its energy security and should not be held hostage to the interests of multinational oil companies.
To our knowledge you have never met with representatives of national consumer groups since you took office in January, 2001. We hope to see you very soon.
President, National Consumers League
Executive Director, The Foundation for Taxpayer & Consumer Rights (FTCR)
President, Public Citizen
Executive Director, Citizen Works