U.S.

Clinton Suggests Brakes On Gas Prices

By CBSNews.com staff CBSNews.com staff

June 20, 2000 / 12:42 PM EDT / CBS

U.S. oil companies blaming soaring gasoline prices in the Midwest on the federal government's stricter air pollution rules, need to "come up with a better explanation," the White House said on Tuesday.

Retail gasoline prices have soared well above $2 a gallon in Chicago and Milwaukee in recent weeks, angering lawmakers and prompting an investigation by the Federal Trade Commission (FTC).

"We can't find a legitimate reason why the prices are as high as they are in Milwaukee and Chicago," said White House spokesman Joe Lockhart.

CBS News White House Correspondent Peter Maer reports Lockhart said he rejects oil company claims that the rise in prices was triggered by new government environmental regulations.

"The gas companies should come up with a better answer for the American people," Lockhart said.

Oil industry experts have blamed the spike in retail prices on several things, including a Michigan pipeline problem and strict new federal rules requiring cleaner-burning or reformulated gasoline on June 1.

U.S. oil companies need to share information with the FTC investigation aimed at getting to the bottom of the price mystery, he said. "It's in everybody's interests for all parties to cooperate with what the FTC is doing."

Meanwhile, OPEC ministers are expected to agree this week to boost petroleum output by at least 500,000 barrels a day, or by 2 percent.

But analysts warned Monday that such an increase wouldn't lead to cheaper prices at the pump for American motorists any time soon.

"No matter what OPEC decides, it's going to be a tough gasoline season in the U.S.," said Peter Gignoux, head of the petroleum desk at Salomon Smith Barney in London.

Oil ministers from the Organization of Petroleum Exporting Countries meet Wednesday in Vienna, Austria, to decide whether to increase supplies to consumer nations that are paying more than $30 for a barrel of crude. OPEC pumps about 35 percent of the world's oil.

Prices of the main U.S. crude blend shot above $33 a barrel last week but began easing off ahead of the meeting as traders anticipated an increase in OPEC output.

Although U.S. gasoline prices have risen dramatically, they are still well below prices paid by drivers in most European and Asian nations.

On Monday, the Energy Information Administration reported that the national average price of gasoline last week was $1.68 a gallon, up 56 cents a gallon from one year ago and the highest price since the government began keeping records a decade ago.

It said Midwest drivers continued to pay the most nationwide - $1.87 a gallon for conventional gasoline and $2.00 for reformulated gasoline.

Several U.S. lawmakers have urged the Clinton administration to release oil from the nation's Strategic Petroleum Reserve to ease crude oil and gasoline prices that they say threaten the nation's economic growth and prosperity.