STATE REPRESENTATIVE
PAUL C. CASEY

Room 473-B
State House
Boston, MA 02133
Telephone: (617) 722-2230
District Office
585A Main St.
Winchester, MA 01890
Telephone: (617) 721-7285 or (617) 438-7185

A View from the Hill

Representative Casey's "View From the Hill" can be found on the web at http://www.winchestermass.org/pcasey.html

FOR IMMEDIATE RELEASE: February 18, 2000
CONTACT: Tommy Voltero (617) 722-2240

"STATE WON'T LET CONSUMERS GET THE 'COLD SHOULDER' "

Anyone who is old enough to remember can easily recall the horrors of the oil crisis of the 1970s. Cars would be lined up on the street on a Saturday morningB often for hours at a timeB just to get gas. There was such a shortage of gasoline that stations would often ration out their supplies, allowing only $10 per vehicle. And after making people wait in line for an hour, they would sometimes run out of gas completely. I have even heard a few stories of fistfights that broke out between customers battling for the last precious gallons of fuel.

Now, we are in the midst of another oil crisis. Crude is now past $30 a barrel, and refined products like heating oil and diesel fuel have topped the price charts.

Admittedly, this crisis is hardly as devastating as its predecessors. Thus far, I have not seen long gas lines, nor have I heard of any incidences of "gas station rage." Yet, the problem is real and its effects are being felt by a wide cross-section of society. Several constituents have called or written to their elected officials across the Northeast region detailing the difficulties they have been facing because of the recent surges in petroleum prices.

People with low or fixed incomes, for example, have been going without heat in order to pay for rent, medicine and groceries. Independent truckers have parked their rigs on the streets because they are practically losing money every time they turn the key. Businesses are having difficulties getting their products to market because of high transportation costs. And ordinary middle class people are watching their hard-earned paychecks quickly disappear to pay for heat and gasoline.

With everyone feeling the crunch of these high prices, people undoubtedly want answers. They want to know not only why this crisis occurred, but what is being done to address the situation.

For this reason, state officials (along with members of the federal government, businesses, and consumer groups) attended a Home Heating Oil Summit on February 16 in order to get a better understanding of the issue. From these discussions, we learned that there were several forces at work which triggered the price hikes.

On the foreign end, we know that OPECB the oil producers' cartelB began cutting back oil production in March of 1999 to raise prices. On the domestic end, wholesalers of heating oil kept their stocks rather low in light of the relatively warm winters we have been experiencing. Thus, when the sudden cold spell hit the region, there was an incredible shortage of heating oil, causing prices to skyrocket (diesel fuel prices went up, in turn, partly because people began using diesel to heat their homes).

To add to this, there were allegations of "price gouging," which is the intentional inflation of prices by wholesalers and/or dealers. Some folks, looking back to the 1970s (when oil tankers would literally drop anchor off the U.S. coast until prices rose), claim that businesses are taking of advantage of consumers to reap record profits. Most of the data indicates, however, that this is not the case.

Nevertheless, the state legislature has been doing everything in its power to ensure that consumers do not get the "cold shoulder" from this oil crisis. The Massachusetts Attorney General has been actively investigating claims of price gouging (which is illegal thanks to laws passed in the 1970s by the state government). A few weeks ago, the Massachusetts General Court passed a resolution urging Congress and the US Department of Justice to perform similar studies on national and international levels to determine if huge oil conglomerates like Exxon and Royal Dutch-Shell have played a part in causing the price hikes.

In addition, the House of Representatives approved a $12 million dollar relief measure to alleviate the burden pressing down on so many of our unfortunate constituents. The proposed funding would provide additional home heating assistance to low and moderate income residents. Households between 175 and 200 percent of the federal poverty level ($33,400 for a family of four) would qualify for this additional aid.

The second aspect of this legislation would direct the Office of Consumer Affairs to study the situation thoroughly and recommend state initiatives to prevent the recurrence of price spikes in the future. This provision recognizes that we must move beyond interim measures to get at the root of the problem.

Thus, it might be necessary for the state to pass legislation mandating that local oil wholesalers maintain a certain level of reserves regardless of market conditions. In this way, we would adequately prepared if the demand for oil suddenly increased, as it did this winter.

Other ways to avert another crisis would be to expand upon the already existing energy efficiency programs that were created by the state government. During the oil summit, New Hampshire Governor Jeanne Shaheen correctly pointed out that the problem also exists on the "demand" side, not just on the "supply" side. Considering that the average home has enough leaks around its widows and doors to equal an open window three feet by three feet, we could do our part on the "demand" side by making our homes more energy efficient.

The proper solution, of course, will be based in multilateral measures on state, federal, and international levels. Consumers can do their part, but ultimately, governments must work together to tackle this problem. Such cooperation with other states in the region, as well as the national government, will help guarantee that "this time is the last time."

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