Clinton concerned about unusually high gas prices in Midwest

June 16, 2000
Web posted at: 2:34 PM EDT (1834 GMT)

NEW YORK (CNN) -- President Bill Clinton expressed frustration and concern Friday over consistently high gasoline prices in the Chicago-Milwaukee area, but said that it's not yet clear if price gouging was taking place.

"It's been very frustrating to me. I'm quite concerned about it," Clinton said during an interview with NBC's "Today" show during a visit to New York.

Prices at the pump in that region have been topping $2 a gallon, much higher than the national average of around $1.50 a gallon.

Clinton cited reasons for the sharp increase, including the shutdown of an area refinery, a leak in a pipeline and an "unusual increase" of demand in the area. Clinton said that the use of cleaner gasoline -- which is more expensive to produce -- would account for about a five or six cents per gallon increase.

	MESSAGE BOARD
Rising oil prices

"So we know that it would be more expensive for a little while until the transportation and the refinery problems were solved, Clinton said. "What we don't know is whether there was any price gouging."

In Washington, the White House on Thursday stepped up its pressure on the gasoline industry to explain the steep increase in gas prices. White House spokesman Jake Siewert said the industry has been unable to "offer any explanation for why gas prices were higher in Chicago and Milwaukee."

Refiners blame the high prices on new reformulated gasoline (RFG) that the Environmental Protection Agency required to be sold beginning this month in polluted cities. They argue the fuel is too difficult and expensive to produce, which has resulted in tight gasoline supplies, and higher prices. The move to offer the cleaner burning gas has been in the works for the past five years.

Clinton said Friday that he has instructed the Federal Trade Commission to investigate price-gouging allegations, and that the Department of Energy and the EPA are looking into the situation as well.

"I am very worried about it, but I am hoping that we can break the logjam on it soon," Clinton said.

Midwestern lawmakers have been pressing the EPA to give Chicago and Milwaukee a waiver from having to sell the cleaner gasoline. The agency rejected similar requests from the Illinois and Wisconsin state governments last month.

EPA Administrator Carol Browner met with House Speaker Dennis Hastert (R-Illinois) and other Midwestern lawmakers on Thursday, and said that the federal investigation had thus far turned up "no reasonable answer" for the rising prices.

SUBHEAD: Senators urge Clinton to tap reserves

Meanwhile, about a dozen Republican and Democratic senators called on Clinton Friday to U.S. strategic reserves to counter what they called an unfair attempt by the Organization of Petroleum Exporting Countries to constrict the supply of oil and drive up U.S. gasoline prices.

In a letter to Clinton, the senators also expressed frustration with the Department of Energy's failure to take steps to convince OPEC to lower oil prices.

"I appreciate attempts by Secretary (Bill) Richardson to cajole OPEC into increasing production, but it hasn't worked and it's time for the United States to play a little hardball," Sen. Chuck Schumer (D-New York) told reporters Friday.

The senators have proposed an "oil swap" by releasing one million barrels a day for forty-five days from the Strategic Petroleum Reserve, a move they hope will force the foreign oil cartel to increase its oil supply.

"If we do nothing and OPEC continues to constrict the supply of oil, the average American will pay $1,000 dollars more this year than ... last year out of their pockets," Schumer said.

Senators said the administration claimed to have solved the problem of high oil and gas prices in March by convincing OPEC nations to increase oil supply if prices topped $28 per gallon, but noted that prices are now at $33 a barrel and there has been no action from OPEC.

Sen. Susan Collins (R-Maine) said the administration's policy of "quiet diplomacy" has failed because the White House has a short-term approach to energy policy.

CNN's Dana Bash and Reuters contributed to this report.

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