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Press Release - Clinton Calls for Senate Investigation

May 10, 2007

Asked Senate Committee to Investigate Oil Refinery Shutdowns and Possible Price Gouging; Highlighted Oil Company's Record-Breaking Earnings During First Quarter

Des Moines, IA -- During a Radio Iowa interview today, Democratic presidential candidate Hillary Clinton discussed her call on the Senate Energy and Natural Resources Committee to investigate the cause of oil refinery shutdowns and possible price gouging during a hearing on gas prices next week.

After reports of limited gasoline supply, news of refinery shutdowns and Exxon Mobil, the world's biggest oil company, reporting a record first-quarter profit of 10 percent two weeks ago, Senator Clinton, yesterday, sent a letter to the Senate Energy and Natural Resources Committee stating that oil companies should use some of their record-breaking profits to keep their refineries open without passing on repair and maintenance costs to their customers.

"We need to investigate whether we need stronger inspections or other processes in place to ensure that refiners, number one, are leveling with us when they talk about refineries being down, and number two, that they invest adequately in maintaining and improving their facilities to avoid this in the first place," Senator Clinton said. "I think that the series of factors that go into this problem really deserve attention because ultimately the oil companies are making more money than they have ever made before. They are not reinvesting it the way they need to in refinery capacity, modernizing refineries and improving their processes. That means that they don't use those profits to keep our gas supply as affordable and regulated as possible and I'd like to know why."

Senator Clinton said, "We can also use the tools of the federal government, like the Federal Trade Commission to launch on-going investigations to look at both this refinery issue and the price gouging issue, and if we need new authorities to enable the government to hold these companies and their refineries responsible. I think that we should attempt to get that legislative authority."

In Vinton, Iowa today, gas prices are as high as $3.23. Gas prices in several Iowa cities including Coralville, Forest City and Des Moines have reached well over $3.00 a gallon.

On average, the profit margin on refining for U.S. producers rose 37 percent in the first quarter to $12.43 per barrel of oil.

Senator Clinton has also proposed legislation to eliminate oil company subsidies and use the proceeds to create a "Strategic Energy Fund" to provide $50 billion for research to promote ethanol and biodiesel production and other clean energy technologies.

The text of Senator Clinton's letter is below:

The Honorable Jeff Bingaman

Chairman

Committee on Energy and Natural Resources

D-304

United States Senate

Washington, D.C. 20510

The Honorable Pete V. Domenici

Ranking Member

Committee on Energy and Natural Resources

D-304

United States Senate

Washington, D.C. 20510

Dear Chairman Bingaman and Ranking Member Domenici:

I write to request that you look at several pressing issues when you convene the Senate Committee on Energy and Natural Resources next Tuesday to hold hearings on the recent spike in gas prices.

Under your leadership, the Senate Energy committee recently reported a bill that will help to make the United States less dependent on foreign oil in the coming years. I look forward to working with you on that legislation when it is brought before the Senate.

As important as these long-term measures are, we now face the immediate problem of record high gas prices. As you know, the nationwide average price for a gallon of regular gasoline broke $3.00 this week, and is predicted to stay at those levels for the duration of the summer.

United States Department of Energy Secretary Samuel Bodman has stated that the temporary shutdown of several oil refineries has reduced refinery capacity and is responsible for the recent spike in prices. According to reports, U.S. gasoline inventories have dropped 12 weeks in a row and are down about 15 percent since February. This reduction in capacity comes at a critical time, when many areas of the country are changing over from winter gasoline blends to summer gasoline blends.

Many of my constituents are suspicious of the timing and cause of these refinery outages. When you convene the Committee next Tuesday, I urge you to examine the cause of these refinery outages and whether we need stronger inspections or other processes in place to ensure that refiners invest adequately in the maintenance of their facilities. We know that the outages are hurting consumers, but they do not appear to be hurting refiners. Recent reports have indicated that refining profits in the first quarter of 2007 increased 36 percent over last year, and the U.S. refining margin increased to over $17 per barrel of oil refined.

In addition, I ask that you examine whether any price gouging has occurred as a result of these unanticipated shortages. I am a supporter of legislation that would give federal and state regulators new authority to prosecute price gouging in the wake of national energy emergencies, as well as put in place measures to ban manipulation and enhance the transparency of our nation's fuel markets.

I appreciate your consideration of this request, and look forward to working with you to act to protect American consumers from unwarranted price increases and to advance legislation to reduce our reliance on oil.

Sincerely yours,

Hillary Rodham Clinton

Excerpt of Radio Iowa interview below:

Kay: First of all what do you think an investigation will yield?

HRC: Well I called on the Senate Committee on Energy and Natural Resources during their hearings next week to examine the recent spike in gas prices because this is just becoming to common an occurrence. First of all we have reports of oil and gas refinery outages. Something we heard last time the prices spiked. We need to investigate whether we need stronger inspections or other processes in place to ensure that refiners number one are leveling with us when they talk about refineries being down and number two that they invest adequately in maintaining and improving their facilities to avoid this in the first place. You may remember during the Enron scandal it was discovered that the refineries in California were deliberately shutting down in order to manipulate prices. And finally we should examine whether there has been price gouging occurring as a result of these unanticipated shortages because we are back up to an average price for a gallon of regular gas breaking $3. In fact I was just told that prices in Iowa city can be as high as 3.20 a gallon that Iowa's average is 2.98. So this is once again a serious problem that I think we deserve answers to.

Kay: We here at Radio Hour did a story in the past couple of weeks because as you mentioned there telling us of these refinery problems and the need to switch to a summer blended fuel. Do you doubt these I guess discussions from the refiners that they are doing this? I guess you are having doubts that they are telling the truth and nothing but the truth.

HRC:: Well we've got enough questions that deserve answers that merit this kind of an investigation. I am not going to be pointing fingers in the absence of evidence, but we need to begin to sort this out. The oil companies have said that they face this transition period where they move to summer blend. They face that every year. What is it that causes this to result in slow downs in supply and even shut downs of refineries. We know that there has been some manipulation in the past, and I just want to be sure that we begin to try to zero in on what the causes are. Obviously the longer term challenge is to move away from dependence on foreign oil beginning with the use of more ethanol, but even there we have problems because a lot of the oil companies are resistant to allowing ethanol pumps for E85 or other blends to be installed at their company owned gas stations or even the independent franchisees. I think that the series of factors that go into this problem really deserves attention because ultimately the oil companies are making more money than they have ever made before. They are not reinvesting it the way they need to in refinery capacity, modernizing refineries and improving their processes. And, that means that they don't use those profits to keep our gas supply as affordable and regularized as possible, and I'd like to know why.

Kay: My follow up question would be, as President what specific authority would you use in this circumstance to address this problem. You are talking about a Senate investigation but you are running to be the president what authority does the president have that you would be using that the current president is not?

HRC: Well there are several authorities that the president has which he could be using right now. If this goes on and we face even higher prices the strategic petroleum reserve could be used to increase supply in the market. I remember my husband threatening to do that during one period in time and low and behold the prices started to drop. We can also use the tools of the Federal Government, like the Federal Trade Commission to launch on-going investigations to look at both this refinery issue and the price gouging issue, and if we need new authorities to enable the government to hold these companies and their refineries responsible. I think that we should attempt to get that legislative authority.

Kay: There are some people in your party who suggest that this president and vice president because they came from the oil industry have turned a blind eye to this problem. Do you share that concern?

HRC: Well I think that they have been certainly more sensitive to the needs of the oil companies than to the needs of consumers and businesses that are paying these high energy price, and the failure to address the long term energy problem that we face with an Apollo like project to really put home grown energy on a fast track is a reflection of there personal experience and their biases toward the big oil companies. I think that the oil companies have been subsidized. Now when they don't need the money from the tax payer because the price is so high and there has been no effort by the administration to try to either diminish that subsidy or switch it to renewable fuels so there has not been much in the way of vigorous action or enforcement by the administration to try to help us deal with this increase demand and tight supply.

Hillary Clinton, Press Release - Clinton Calls for Senate Investigation Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/293506

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