By Rep. Michael Hanley
House Democratic Leader

Although gas prices have declined somewhat recently, there is little argument that they are still too high. Michigan is experiencing its peak season for gasoline consumption - the summer vacation and tourist season - and it is very distressing what these prices are doing not only to our family budgets, but also to the state's tourism and agriculture industries.

The oil industry would like us to sit back, do nothing, and trust that prices will eventually come down. The industry has begun a very public lobbying effort to convince consumers that extenuating circumstances - including busted pipelines, low reserves, cleaner gasoline and foreign governments - are to blame for people in Midwest states like Michigan paying upwards of 50 cents more for a gallon of gasoline than people in other areas of the nation. All the while, "Big Oil" is raking in big profit.

The problem is the control that oil corporations have over the price of gasoline. The oil giants exercise this control through corporate ownership of about 1,500 service stations, or roughly 25 percent of all the gasoline retail outlets in Michigan. Furthermore, the oil companies control another 50 percent of the market through exclusive supplier contracts with service stations owned and operated by independent businesspeople.

Corporate retail outlets, combined with exclusive contracts, give big oil companies the power to set and adjust prices arbitrarily and unilaterally. This makes the gasoline market anti-competitive, and hurts Michigan consumers.

Democrats in the Michigan House of Representatives have decided that we cannot sit back and do nothing. We have proposed a package of legislation to open the gasoline retail market to more competition, thereby lowering prices at the pump and preventing price gouging by big oil corporations.

The main piece of the Democratic plan is a bill that would force big oil corporations like Shell, Exxon/Mobil, and BP/Amoco to sell the nearly 1,500 Michigan service stations they own to independent retailers. Our plan also would end the exclusive contracts -- allowing independent retailers to seek the lowest wholesale price from among several gasoline refiners and pass the savings along to motorists. These proposals loosen the iron-fisted grip of big oil companies over the marketplace and lower prices by increasing competition.

Our proposal also includes legislation to prohibit the practice of "zone pricing", in which big oil corporations set artificial prices based on where service stations are located. We also are looking at creating a new state excess profits tax to be paid only by big oil corporations whose profits exceed a certain threshold in their Michigan businesses. This would discourage them from engaging in "profiteering," an oil industry practice of using artificially high prices to gouge consumers in order to maximize profits.

Michigan motorists are paying some of the highest prices in the nation for gasoline and the anti-competitive market has put Michigan consumers at the mercy of big oil corporations. While some policy makers have focused on reducing taxes paid by motorists - and Democrats are open to discussing this option - we must focus on the root of the problem: big oil's control over prices.

It is obvious that the power of these corporations to artificially control the price of gasoline, through its control of 75 percent of the retail marketplace, is a significant factor in how much people pay to fill their tanks. We all know that competition drives down prices. If Michigan consumers are to see long-term relief, we must make the gasoline market more competitive.