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June 28, 2000


WASHINGTON - Governor George H. Ryan told the U.S. House Judiciary Committee today that he supports a federal investigation of pricing practices by oil companies that have led to consumers in Chicago paying the nation's highest retail gasoline prices.

Ryan also told the committee that the U.S. Environmental Protection Agency shoulders a portion of the blame for high gas prices because the agency has refused to suspend new gasoline production rules that have caused a sharp increase in pump prices.

Ryan testified at a Judiciary Committee hearing on a proposed Federal Trade Commission investigation into alleged price collusion by the oil companies.

"High gas prices threaten to increase the cost of consumer goods that average families and those on fixed incomes depend on," Ryan said. "The people of Illinois feel like they have been singled out unfairly and they're getting tired of hearing officials of the oil companies and the EPA point fingers at each other. I believe that an investigation by the FTC on allegations of collusion and price gouging by the oil companies is necessary because we don't have all the answers we need."

During the week of June 1, retail gasoline prices in the Chicago area soared above $2 a gallon, far above the national average pump price. While retail prices have slowly been falling, Illinois consumers are still paying higher prices than in other major cities.

Recent studies indicate that sustained high gas prices in the Chicago area could drain $1 billion out of the region's robust economy.

Ryan attributed the sharp increases to new gasoline production rules implemented by the U.S. EPA as part of the second phase of the federal Reformulated Gasoline Program. The new rules increased the production costs of gasoline for the Chicago area.

Over the last 13 months, Ryan, the governors of several other states and Chicago Mayor Richard M. Daley repeatedly requested a temporary suspension of the new rules so the EPA could assess their impact on the economy, on gas prices and on the environment. Suspending the new rules would not harm the environment because the area could continue to use the previous RFG production rules to make cleaner burning gas.

Earlier this month, the U.S. House Committee on Science said if the EPA's new gasoline production rules were suspended, the retail price of gasoline could drop by 25 cents to 50 cents per gallon in the Chicago area.

Last week Ryan called the Illinois General Assembly into special session to consider a temporary roll back of the state's share of the Illinois sales tax on gasoline. This move is necessary because of a temporary roll back of Indiana's gas sales tax on July 1, a reduction that will put Illinois retailers at a competitive disadvantage.

The state's sales tax on gasoline totals 6.25 percent. State government's share is 5 percent. It is estimated that a 5 percent reduction in the tax will cost the state treasury $180 million. Ryan has said this shortfall can be made up through unanticipated increased tax revenues and some reductions in state agencies' operating budgets.

House Judiciary Committee Chairman Henry Hyde called the hearings to determine the boundaries for an FTC investigation into gasoline price increases in Chicago and Milwaukee. Testifying with Ryan at the hearing was Wisconsin Governor Tommy G. Thompson, who also has called for a suspension of the new EPA gas production rules that affect Southeastern Wisconsin.


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