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Senate orders probe of possible gas price gouging

The Senate on Friday unanimously passed a bill directing the Federal Trade Commission to tell Congress whether gasoline wholesalers jacked up prices in the wake of Hurricane Katrina.

"No one anywhere in the country should be able to get away with profiteering from a disaster like Hurricane Katrina," said Sen. Hillary Rodham Clinton, D-N.Y., a co-sponsor of the bill. "This investigation will help make sure that New Yorkers and consumers around the country are not gouged at the gas pump."

Prices in many markets rose between 50 and 75 cents during and right after the hurricane devastated the Gulf Coast, and still are hovering around $3 a gallon.

With demand slackened after Labor Day and production increased, most authorities expect prices to ease slightly.

The legislation authorizes the FTC to spend at least $1 million on the probe, and requires the agency to file an initial report to Congress within 30 days. It asks for a final report no later than six months. The FTC has not issued a nationwide report on anti-competitive practices in the gasoline business since early 2001.

Clinton's bill is an amendment to a Commerce and Justice Department Appropriations bill and will not become law until a House-Senate conference on 2006 spending merges it with a House measure that does not include a directive to investigate.

Weeks before Katrina hit the Gulf of Mexico states, Clinton wrote to President Bush urging him to direct the FTC to probe the already high gasoline prices.

When Clinton realized the president was not going to respond to her request, she joined two other Democrats, Sens. David Pryor of Arkansas and Barbara Mikulski of Maryland in sponsoring the amendment.

An FTC official speaking on background said the agency "constantly monitors the price of gasoline at 200 retail sites nationwide."

In testimony before a House Committee on Sept. 7, an attorney for the FTC, John H. Seesel, said, "The Commission's experience from its past investigations and the current monitoring initiative indicate that unusual movements in gasoline prices typically have a natural cause" such as natural refinery fires or pipeline disruptions, or changes imposed by air quality standards.

Seesel indicated the recent price spikes result from market forces and that no further investigation into possible collusion was warranted.

In Albany, Marc Violette, spokesman for Attorney General Eliot Spitzer, said Spitzer's inquiry into gasoline price gouging is in its final stages. The staff is examining about 2,200 complaints and awaiting responses from 75 retailers from whom Spitzer requested reports on pricing.

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