Washington – Gasoline prices that leaped after Hurricane Katrina slammed into the Gulf Coast should drop during the fall but only to a nationwide average of $2.60 per gallon, federal energy experts told Congress on Wednesday.
The catastrophic storm merely aggravated what already was a supply-and-demand imbalance, Bush administration officials said at a House Energy and Commerce Committee hearing on the effects of the hurricane on energy costs.
Even into early 2006, prices will average $2.40 per gallon, the Energy Information Administration said.
Federal officials declined to call the cost run-up price-gouging and said they couldn’t even define price-gouging. They also resisted the idea that the federal government should take any steps to protect the public, individual gas-station dealers or even oil companies that hike prices.
“I think Congress needs to tread quite carefully in this area,” said John H. Seesel, the Federal Trade Commission’s associate general counsel for energy. Many states have laws banning price-gouging, he said, and the FTC’s role is to watch for businesses acting together to keep prices high.
Trying to cap gasoline prices also could lead to a repeat of fuel shortages and long lines at gas stations seen in the 1970s, he said.
The statements came at a hearing called to focus on energy issues but which included lawmakers’ wide-ranging criticism of how the federal government handled relief efforts in the aftermath of Katrina.
Lawmakers also pushed the ideas of building additional oil refineries, increasing domestic energy supplies, and encouraging conservation and alternative energy sources.
Members of both parties asked repeatedly at the hearing about the justification for the steep increases in gas prices.
“Why were prices of gas skyrocketing in Colorado even though there was ample supply of gas at that time and frankly no connection to the distribution network in the South,” said Rep. Diana DeGette, D-Denver. “Frankly to us, this looks like price-gouging.”
DeGette said she attended a Tuesday evening briefing by Bush Cabinet members and that Energy Secretary Samuel Bodman had said there was no “real long-term disruption in supplies” of gasoline.
Energy Department Undersecretary David Garman told DeGette he believed Bodman was referring to no permanent damage to supplies but there were short-term supply shortages.
Guy Caruso of the Energy Information Administration, said gasoline prices began climbing before the hurricane as Gulf Coast refineries closed down. The futures market reacted strongly after Katrina, he said, driving up prices.
“I guess it’s a fine line between market uncertainty and price- gouging,” DeGette said.
Since Katrina, the Energy Department has received 7,000 reports of potential price-gouging, Garman said. Those are being forwarded to the FTC and state attorneys general.
U.S. Sen. Ken Salazar, D-Colo., also discussed high gas prices Wednesday, saying the government should set a conservation goal of 10 percent.
If that fails, he said, other options such as temporary price caps or mandatory “no-drive days” might have to be considered to ease demand.
Staff writer Jim Hughes contributed to this report.
