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Press Release

4/28/2008

North Carolina: Hillary Clinton's Plan to Address Soaring Prices at the Pump

Americans are being squeezed at the pump like never before. The price of oil is approaching $120 a barrel. Gas is at a record high in North Carolina of $3.59, up from $3.26 a month ago and $2.90 a year ago, a 23 percent increase in just one year. And while the average family's energy costs have gone up $2,000 a year since President Bush took office, average North Carolina family incomes have fallen by almost $5,000. Record oil prices are contributing to higher energy prices, food prices and a squeeze that is making many middle class families feel like they are falling further behind. American families are hurting now. They need a President who will focus every day on ensuring that they can make ends meet. That is why today, Hillary is unveiling her aggressive plan to address the problem of skyrocketing gas prices. Hillary's plan includes:


  • Imposing a windfall profits tax on oil companies and using the money to suspend the gas tax for the peak summer months;

  • Closing $7.5 billion in oil and gas loopholes and using the funds to provide assistance for lower-income families to pay their energy and grocery bills;

  • Cracking down on speculation by energy traders and market manipulation in oil and gas markets that are driving up the price of oil by at least $20 a barrel;

  • Pressuring OPEC to increase oil production, including by filing a WTO complaint against OPEC countries

  • Stopping new additions to the Strategic Petroleum Reserve and standing ready to release oil to counter market spikes and reduce volatility.

This plan builds on Hillary's long-term plan to reduce our dependence on foreign oil and address global warming. She has committed moving America towards energy independence by cutting foreign oil imports by two-thirds from 2030 projected levels, more than 10 million barrels per day.

Details of Hillary's Plan

Enact a Windfall Profits Tax on Oil Companies to Pay for Temporarily Suspending the Gas Tax - Hillary will impose a windfall profits tax on oil companies and use the money to temporarily suspend the 18.4 cent per gallon federal gas tax and the 24.4 cent per gallon diesel tax during the upcoming peak summer driving months. Hillary will ensure that this relief is passed along to consumers by charging the Federal Trade Commission with conducting aggressive oversight. Unlike Senator McCain’s plan, Hillary’s plan will be fully paid for by taking away oil company profits through a windfall profits tax. This will ensure that the Highway Trust Fund is not affected at all by the gas tax suspension, and can continue to support critical repairs and maintenance for our infrastructure and highways. Suspending the gas tax will provide real, immediate assistance to American families and for our economy. Recent testimony before the House of Representatives by the American Trucking Association indicates that even small changes in price can have big impacts. Just a one-penny decrease in the price of diesel annualized over an entire year would save the trucking industry $391 million a year.

Take Immediate Action to Crack Down on Speculation and Market Manipulation in Oil and Gasoline Markets - Oil and gasoline markets contain loopholes for traders, and the markets are inadequately policed by regulators under current law. As a result, there is considerable concern that current market prices reflect the influence of speculators and other forces beyond supply and demand. In early April, an Exxon Mobil executive testified under oath before a House committee that the price of oil should be $50 to $55 per barrel based on supply and demand fundamentals. Marathon Oil’s CEO stated last October that: "$100 oil isn't justified by the physical demand in the market - it has to be speculation on the futures market that is fueling this." Hillary would take action to reduce the influence of speculators, crack down on market manipulation in oil markets, and outlaw price gouging by:

  • Closing the Enron Loophole - Hillary supports closing the "Enron loophole," which exempts electronic trading of energy commodities by large traders from U.S. government regulation. The loophole has helped lead to the dramatic growth of trading on unregulated electronic energy exchanges, and has made the U.S. energy markets vulnerable to price manipulation and excessive speculation. Even Alan Greenspan has cited "investors and speculators who took on larger net long positions in crude oil futures" as one cause of oil prices. In June 2006, the Senate Permanent Subcommittee on Investigations issued: "The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat." This report analyzed the degree to which financial speculation in energy markets had contributed to the dramatic increase in energy prices in recent years. The report concluded that "[s]peculation has contributed to rising U.S. energy prices," and endorsed the estimate of various analysts that the influx of speculative investments into crude oil futures accounted for approximately $20 of the then-prevailing crude oil price of approximately $70 per barrel.

  • Protect the consumer market from price gouging for petroleum products -- Hillary will make it unlawful for any supplier -- wholesaler or retailer -- to sell crude oil or gasoline at an unconscionably excessive price. Price gougers would face new fines and criminal penalties of up to $1 million and five years in prison and civil penalties could be assessed from $500,000 up to $5 million. Today, there are no federal laws prohibiting price gouging in the oil and gas industry, leaving some states to prohibit these actions. In 2006, the Federal Trade Commission conducted a study of post-Katrina gas price, and while it did not find widespread gouging, it did find 15 examples of pricing at the refining, wholesale, or retail level that fit a definition of price gouging under legislation that Senator Clinton has backed and is proposing to enact now.

  • Call on the Federal Trade Commission to Take Action Against Market Manipulation in Wholesale Oil Prices - The energy bill passed last year included new provisions to provide greater transparency and prevent manipulation in wholesale oil markets, and to empower the Federal Trade Commission to investigate and pursue violations. Unfortunately, the Bush Administration has chosen not to use this new authority. To ensure that oil companies and traders are not ripping off consumers, Hillary is calling on the FTC to begin investigations using these new powers. In addition, Hillary is calling on the FTC to propose regulations under the new law within 60 days to prevent market manipulation in oil markets. Recent cases show that market manipulation is a concern in oil markets. In 2007, Marathon Oil paid a $1 million fine to the Commodities Futures Trading Commission to settle charges that a subsidiary had tried to manipulate crude oil prices in 2003. Action by the FTC to investigate the current oil market and to develop and enforce new prohibitions on market manipulation would help to minimize foul play in oil and gasoline markets.

Take more aggressive action to pressure OPEC to increase production - OPEC recently reiterated that it will not even consider increasing crude output until September 2008, even though limited supplies are contributing to record oil prices. Hillary believes we should be taking more aggressive action to address OPEC’s control over global production levels and hold OPEC accountable for its decisions. President Bush’s efforts to pressure OPEC over the past seven years have been inconsistent and unsuccessful. Hillary supports sending a strong signal to OPEC that the era of complacency has ended. Hillary will:


  • Use the WTO to Challenge OPEC’s Production Quotas - With nine of the thirteen OPEC member countries also being members of the WTO, Hillary believes we should use the tools available at the WTO to address OPEC’s refusal to increase production. WTO rules currently prohibit member countries from imposing export quotas. Yet OPEC member countries are actively and explicitly banding together to restrict oil production and affect global prices. Hillary is calling on the President to engage in immediate negotiations with OPEC members and, if no progress is made, file a formal complaint against OPEC countries at the WTO. Filing a complaint at the WTO will send a clear signal to OPEC countries that the U.S. is committed to an open, transparent global oil market. Such a step will give OPEC members an incentive to increase production as well.

  • Allow OPEC Production Decisions to Be Challenged Under U.S. Anti-Trust Law - Currently, OPEC countries cannot be challenged under U.S. anti-trust laws, even when they are engaged in coordinated, commercial activity to control the global oil market. Hillary supports amending the Foreign Sovereignty Immunities Act so that the Justice Department can bring suits against OPEC countries in U.S. courts for price fixing. Changing the rules would help hold OPEC countries accountable for their decisions.

Close the oil and gas loopholes and use those resources to provide direct assistance to working families facing skyrocketing energy bills on top of record gas prices. Hillary believes that in addition to imposing a windfall profits tax on large oil companies, Congress should move immediately to end the approximately $7.5 billion per in tax giveaways and subsidies that we continue to provide to oil and gas companies, despite their record profits. These subsidies are in part a result of the 2005 Energy Bill she voted against. She would use those resources this year to provide assistance to lower-income families who are not only being hit at the gas pump, but with skyrocketing energy and food bills as well. This winter, a record number of families were forced to seek assistance through the Low-Income Home Energy Assistance Program (LIHEAP) to heat their homes. This included 337,000 North Carolina families. Hillary was the only candidate to call for providing emergency energy assistance to these and other struggling families as part of the economic stimulus package. Now, as many states’ moratoriums on utility cutoffs expire this spring, millions of families could face the prospect of having their energy shut-off and having to go without electricity, hot water or the ability to keep their homes cool this summer. Hillary will use a portion of the proceeds from closing the oil and gas loopholes to ensure that these hardworking families, who are already struggling to pay for gas at the pump, do not face the extra hardship of having their energy cut off. She will use the remainder of the proceeds to provide immediate aid to lower-income families that are facing high food prices as a result of the record price of oil.

Stop filling the Strategic Petroleum Reserve (SPR) and release oil from it when that becomes necessary - Hillary is calling on President Bush stop taking oil off the market and putting it into the Strategic Petroleum Reserve (SPR). The SPR is now 97 percent full, which analysts believe is more than adequate. Continuing to fill it at these high prices exacerbates high oil prices and costs taxpayers money. Hillary also believes that the SPR should be more actively managed to enable releases from the SPR to counter market spikes and reduce volatility.

Proposals to Reduce our Dependence on Foreign Oil Over the Long-Term

The plans to address rising gas prices in the short term build on Hillary's bold, long-term, comprehensive plan to reduce our dependence on foreign oil and move America towards energy independence. (www.hillaryclinton.com/files/pdf/poweringamericasfuture.pdf). Key elements of that plan include:

  • Raising fuel efficiency standards (CAFE) to 55 miles per gallon by 2030;
  • A $150 billion investment in researching, developing, and deploying renewable and alternative energy;
  • Cutting our foreign oil imports by two-thirds by 2030;
  • Providing $1.5 billion per year for public transit, an additional $1 billion for intercity rail, and additional funds for congestion reduction, better traffic management and telecommuting;
  • Providing tax credits and research and development funding for plug-in-hybrid vehicles, which can get up to 100 mpg; and
  • Conserving fuel in the federal fleet. Hillary will call on all federal government agencies to suspend non-essential travel and other activities that use gasoline or diesel fuel, and encourage employees to carpool, telecommute, and use public transportation to reduce fuel use. And she will direct federal employees to reduce maximum speeds to conserve fuel, with exceptions for law enforcement and other emergency services. Under Hillary's plan, the agencies will to report to the White House once a month on their energy use and the impact of conservation efforts.