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CNN Today

Debate Rages Over Cause of Skyrocketing Gas Prices

Aired June 16, 2000 - 2:05 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: High gasoline prices are moving higher as the summer driving season kicks into high gear. Gas especially is expensive in the Midwest, around Chicago and Milwaukee. Prices there have averaged more than $2 a gallon, compared with the national average, about $1.62. Refiners blame the government for requiring cleaner, more expensive gasoline in some sections of the Midwest.

Consumer anger about $2 gas has captured the attention of lawmakers on Capitol Hill. And President Clinton says he's frustrated and concerned about it.

More on that from CNN's Kelly Wallace in New York.

KELLY WALLACE, CNN CORRESPONDENT: Well, Lou, President Clinton said he's worried, but also hopeful that the gas prices will -- they'll find answers as to why gas prices have been so high in the Midwest. In an interview earlier today, he said there are a few reasons to explain some of the increases. He cited the shutting down of a refinery, a leak in a pipeline, and the unusual demand, but said at this time, there is still no way to explain why gas prices are significantly higher in the Midwest than anywhere else in the country.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: We know that it would be more expensive for a little while until the transportation and the refinery problems are solved. What we don't know is whether there was any price gouging. So we've got the Federal Trade Commission looking into that, and we've also had the Department of Energy and the Environmental Protection Agency looking into it. I'm very worried about, but I'm hoping that we can break the logjam on it soon.

(END VIDEO CLIP)

WALLACE: Meantime, lawmakers are stepping in. A bipartisan group of senators wrote to President Clinton today urging the administration to tap into the strategic oil reserve to counteract what these senators accuse the oil producing nations, or OPEC, of doing. They say OPEC is trying to hold the supply of oil down to keep gas prices high.

(BEGIN VIDEO CLIP) SEN. CHARLES SCHUMER (D), NEW YORK: I appreciate attempts by Secretary Richardson to cajole OPEC into increasing production. But it hasn't worked. And it's time for the U.S. to play a little hardball.

(END VIDEO CLIP)

WALLACE: The White House says it is continuing to consult with members of OPEC and believes that the members will find it is in their longterm interests to keep supply and price stable. As for tapping into the strategic reserve, the White House says it has not ruled that out, but that it is not under active consideration. A spokesman said that the problem is particularly acute in one part of the country, and the administration is trying to find out why.

Well, the oil industry thinks it knows the reason for the increase in prices. It says that so-called cleaner gasoline, or reformulated gasoline, mandated by the Clinton administration at the beginning of June to try and bring down air pollution is more difficult and more costly to produce.

(BEGIN VIDEO CLIP)

EDWARD MURPHY, AMERICAN PETROLEUM INSTITUTE: There have been numerous investigations over I don't know how many years, and there has never, never been an instance found where any sort of anti- competitive behavior led to price increases in this industry. So, we're very, very confident that what is happening is a normal reaction to a market system. And at the base of that is problems with the regulations that this administration has imposed on the industry. I think to try and dodge that, to suggest that there's something else happening, is in fact doing a disservice to American consumers, and I think is misleading us about what the problem might be.

(END VIDEO CLIP)

WALLACE: The president said the cost of producing that cleaner gasoline should only account for a 5-6 cents a gallon increase in prices. However, the administration is looking into whether the EPA, the Environmental Protection Agency, should offer waivers to Chicago and Milwaukee so they don't have to produce that reformulated gasoline.

Kelly Wallace, CNN, reporting live from New York.

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