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GAO: Cheney Stifled Energy Probe

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Cheney Stifled Energy Probe, GAO Investigators Say

Mon August 25, 2003 04:43 PM ET

By Peter Kaplan

WASHINGTON (Reuters) - Congressional investigators said on Monday that Vice President Dick Cheney had stymied their investigation into his energy task force by refusing to turn over key documents.

The General Accounting Office, the investigative arm of Congress, said it was impossible to tell how much energy companies or industry groups may have influenced the task force's 2001 report because the administration withheld important records.

"The extent to which submissions from any of these stakeholders were solicited, influenced policy deliberations or were incorporated into the final report is not something that we can determine based on the limited information at our disposal," the GAO said.

Administration officials did not account for much of the money spent on the task force and could not remember whether anyone took official notes during the 10 Cabinet-level meetings the group held in 2001, the investigators said.

The report came more than eight months after a federal judge rejected the GAO's demand that the administration turn over task force records.

Cheney spokeswoman Jennifer Millerwise advised critics toput the dispute behind them. "Now that the courts have dismissed the GAO lawsuit and GAO has issued its final report, we hope that everyone will focus as strongly as the administration has on meeting America's energy needs," shesaid.

Instead, the GAO report provoked a new round of complaints from Democrats in Congress.

"This report is a sad chronicle of the efforts of the office of the vice president to hide its activities from the American people," said Michigan Rep. John Dingell, the senior Democrat on the House Energy and Commerce Committee.

The task force issued a report to President Bush in May, 2001. The administration announced an energy policy shortly afterward, calling for more oil and gas drilling and a revival of nuclear power. The policy bogged down in Congress.

Critics of the administration, including environmentalists and some Democrats in Congress, said they suspected the energy industry had undue influence on the task force.

White House officials argued that the GAO had overstepped its bounds and forcing them to turn over the records would hamper their ability to get "unvarnished" expert advice.

The GAO's final report confirmed that administration officials met with a procession of lobbyists and executives from the energy industry, including coal, nuclear, natural gas and electricity companies. But it did not shed much new light on the task force's deliberations, beyond information already shaken loose by private lawsuits against the administration.

Those suits forced the release of records from agencies such as the Energy Department, but not from the White House.

According to the GAO report, administration officials said no outside groups attended the 10 meetings in Cheney's ceremonial office in the White House complex.

"However, no party provided us with any documentary evidence to support or negate this assertion," the GAO said. "Agency officials could not recollect whether official rosters or minutes were kept at the meetings."

Cheney's office turned over 77 pages of documents relating to money spent on the task force, but all were either irrelevant or useless, the GAO said.

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Paying At The Pumps

Joan Claybrook is president of Public Citizen, and Wenonah Hauter is director of Public Citizen’s Critical Mass Energy and Environment Program.

Record increases in gasoline prices are socking Americans in the pocketbook as the Labor Day weekend approaches, but instead of promoting policies that would moderate prices -- such as stronger fuel economy standards and tighter oversight of Big Oil -- Congress is steering toward passage of anti-consumer energy legislation that would do little but shower billions in taxpayer subsidies on energy companies.

The nationwide average price for gasoline soared to a new all-time record on Monday, hitting $1.75 per gallon -- just in time for one of the heaviest driving seasons of the year.

Some industry analysts blame a broken pipeline in Arizona and the temporary shutdown of seven refineries due to the massive electricity blackout in the Northeast. But such disruptions occur periodically and would not cause this type of price spike if the government promoted conservation and exercised proper oversight of the industry by, for example, requiring oil companies to maintain minimum reserves and adequate inventories.

A bigger problem, on the supply side, is industry consolidation that gives a handful of companies tremendous pricing power through mechanisms such as keeping inventories of crude oil and refined gasoline low in advance of peak demand periods. On the demand side, the number of gas-hogging sport utility vehicles has more than tripled since 1992 (to nearly 22 million) and the number of pickup trucks has grown by 40 percent (to 38 million). But the federal government has not upgraded fuel economy standards significantly since the 1970s, and the Senate version of energy legislation contains new hurdles to raising those standards.

The proliferation of SUVs and pickup trucks has reversed the course of oil savings that began with the passage of Corporate Average Fuel Economy (CAFE) standards in 1975, following the Arab oil embargoes. Even though they are used much like cars, SUVs are treated as "light trucks" and have more lenient fuel economy requirements.

Strengthening fuel economy standards would make motorists and our economy less vulnerable to supply disruptions, market manipulation and price shocks. Congress should be focusing on conservation, but instead it is pursuing an energy bill that gives away billions in taxpayer dollars to big energy companies with no savings for consumers or help for the environment.

In terms of gasoline consumption, the average 2002 model SUV uses 40 percent more gasoline than an average 2002 model car for a 100-mile trip. Largely as a result of the SUV proliferation, the average fuel economy of the U.S. passenger vehicle fleet declined from 21.7 miles per gallon (mpg) in 1992 to 20.4 mpg in 2002, the lowest level since 1981. Less efficiency triggers greater demand for gasoline, putting pressure on prices.

SUV owners also pay significantly more at the gas pumps. With gas prices at $1.66 per gallon (the average price on Aug. 25), the driver of the average 2002 model SUV would pay $9.59 to drive 100 miles, while the driver of an average 2002 car would pay $6.83.

Less efficiency triggers greater demand for gasoline, putting pressure on prices.

On the supply side of the equation, as a result of mergers, the five largest oil companies operating in the United States now control 61 percent of the domestic retail gasoline market, 48.5 percent of the domestic oil refinery market and 50 percent of domestic oil exploration and production. ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Shell also control 15 percent of the world’s oil production. These top five corporations now produce more oil everyday than Saudi Arabia, Kuwait and Yemen combined.

It is no surprise that gasoline prices are skyrocketing as we approach Labor Day weekend. This is what you get when you have a handful of mega-corporations dominating the market, and it is what we predicted when the Federal Trade Commission (FTC) allowed massive consolidation of the oil industry in 1999 and 2000.

These new mega-corporations are involved in all facets of the oil and gas industry: exploration, production, refining, transportation and retail sales. This vertical integration has resulted in a handful of corporations controlling a substantial chunk of the domestic oil and gas market, allowing them to artificially inflate prices and take advantage of any supply disruptions by gouging consumers.

In March 2001, the FTC reached a curious conclusion about high gasoline prices in the Midwest. While it claimed that no collusion had taken place under current law, it found that "conscious (but independent) choices by industry participants" to intentionally withhold supplies resulted in artificially high prices. The report, however, did not publicly name the names of the companies it alleged to have inflated prices, since the FTC considered the information proprietary.

In response to this latest gasoline crunch, there are several roads that Congress should take: raise CAFE standards for all passenger vehicles, including SUVs, to 40 mpg, to be phased in by 2015; require oil companies to maintain sufficient reserves and inventory to reduce price volatility; immediately conduct hearings to determine the cause of price spikes and conduct regular reviews of the status of competitive markets in the oil industry; and reject the current energy legislation pending in a House-Senate conference committee.

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