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CNN Today

Chicago's Skyrocketing Gas Prices: Who is to Blame?

Aired June 20, 2000 - 1:16 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: Now, the $64,000 question: Who is to blame for the high price of gasoline in Chicago? The oil companies blame the government, and the government, of course, is more than a little suspicious of the oil companies.

NATALIE ALLEN, CNN ANCHOR: Now members of Congress have started their own investigation, and CNN's Jeff Flock reports that's only added fuel to the fire.

(BEGIN VIDEOTAPE)

JEFF FLOCK, CNN CORRESPONDENT (voice-over): It wasn't pretty, either outside or inside the hearing room in Chicago.

ERIC VAUGHN, RENEWABLE FUELS ASSOCIATION: Something strange, fishy, stinky is going on here.

FLOCK: The people who make ethanol say Big Oil is out to get them. Big Oil says everyone is out to get them.

DAVID SYKUTA, ILLINOIS PETROLEUM COUNCIL: Allegations of price gouging are nonsense.

FLOCK: The hearing was convened by Chicago congressmen who represent some of the city's poorest drivers, ones least able to pay gas prices that jumped again Monday to an average of $2.13 a gallon. That's a half dollar over the national average.

BOB PERCIASEPE, ENVIRONMENTAL PROTECTION AGENCY: The cost of producing it does not account for these differentials that you are seeing.

FLOCK: The EPA says it's not the new, cleaner-burning gas it now requires. But the oil industry says part of the problem is that new blend of regular gas and ethanol, which has a higher evaporation rate. That, they say, is what makes it harder and costlier to produce.

VAUGHN: Ethanol does not have a higher vapor pressure; it's lower than gasoline. But when they're blended together, there is a slight increase. And that has to be taken into account.

SYKUTA: Oh, Eric, that's fiction and you know it.

FLOCK: David Sykuta of the Illinois Petroleum Council says a bigger part of the problem is worst-in-the-nation taxes in Chicago, where there is a state motor fuel tax, federal excise tax, state environment tax, basic state sales tax, local state sales tax, a Chicago extra sales tax, a county gas tax, and a Chicago gas tax. On the $2.13 gallon of regular gas, that's 68 cents in taxes.

(on camera): While everyone argues about it, people out here on the street have to deal with it. One suburban Chicago police force is considering layoffs because of fuel costs. Some delivery companies are imposing fuel surcharges. And Chicago taxi drivers, unable to raise their rates by law, are now threatening a strike for today.

I'm Jeff Flock, CNN, in Chicago.

(END VIDEOTAPE)

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