WASHINGTON (AP) - Senators, both Republicans and Democrats, said Tuesday that they suspect price gouging as gasoline costs soared in the aftermath of Hurricane Katrina but complained that the government doesn't have the ability to investigate or prevent such market abuses. "The American people are being victimized more than any free market would warrant," said Sen. Gordon Smith, R-Ore., at Senate hearing on the impact of the hurricane on energy prices.
Smith and other senators said regulators, including the Federal Trade Commission, are not aggressively pursuing price gouging and other market manipulation by energy companies reaping huge profits.
Sen. Pete Domenici, R-N.M., chairman of the Energy and Natural Resources Committee, which held hearings into the recent price spikes, said Congress needs to give agencies the tools to investigate price- gouging complaints.
"There are growing concerns that oil companies are making too much in profits at the expense of consumers," said Domenici.
Sen. Jon Corzine, D-N.J., said that even as crude prices were declining, gasoline prices at the pump soared by 25 percent. "There's something not right in how the market is working," he said.
Several Democrats called for gasoline price controls.
"The president needs to have emergency powers to halt gas price gouging," said Sen. Maria Cantwell, D-Wash.
Sen. Byron Dorgan, D-N.D., said he will introduce legislation for a windfall profits tax on oil companies, with the proceeds used to rebate consumers who have paid huge prices at the pump. He was not optimistic about the proposal's prospects.
"Most likely Congress will do little or nothing but talk a great deal and hold hearings," said Dorgan.
Twenty-three states have price-gouging statutes, but Domenici acknowledged they are "all over the waterfront" as to how they are used. In Virginia, a government must declare an emergency for the law to be used.
The FTC does not have authority over price gouging unless it involves an antitrust or market monopoly issue.
The afternoon of testimony demonstrated that one person's price gouging may be another person's justified price response to changing conditions of supply and demand.
James Overdahl, chief economist for the Commodity Futures Trading Commission, said the agency is stepping up its oversight of the gasoline futures markets but has not seen evidence of price manipulation related to Hurricane Katrina.
Industry representatives blamed retail-price spikes on the disruption of supplies and the anticipation of shortages.
Separately, the Energy Department said it was expanding its "hotline" for complaints from motorists about price gouging at pumps to including a toll-free number, 1-800-244-3301, that can be used for complaints.
"We recognize there are some bad actors that may be to take advantage of the situation," said Energy Secretary Samuel Bodman. Complaints to DOE are forwarded to the Federal Trade Commission.
Meanwhile, the federal Energy Information Administration told lawmakers that the high gasoline prices triggered by disruptions from Hurricane Katrina were expected to ease in the coming weeks.
Crude prices and wholesale gasoline prices dropped for a second straight trading day Tuesday on the New York Mercantile Exchange.
"We expect gas prices to ease off in the coming weeks" and more Gulf refineries return to operation and more gasoline imports begin coming into the country, said EIA Director Guy Caruso.
Caruso said if recovery of Gulf refineries and offshore production facilities goes as anticipated, EIA projects gasoline prices to average $2.60 a gallon nationwide in the third quarter of this year and $2.40 a gallon next year. The EIA said the average price of regular-grade gasoline soared by nearly 46 cents a gallon to an average of $3.069 nationwide last week.
The Interior Department reported that offshore oil production facilities in the Gulf, though temporarily shut down, avoided extensive, long-term damage from Katrina.
The hurricane disrupted 95 percent of Gulf oil production, a region that accounts for 29 percent of U.S. domestic production.
Interior Assistant Secretary Rebecca Watson said many of those platforms are coming back into operation and that 90 percent of the offshore production facilities in the Gulf avoided extensive, long- term damage.
