Scathing Report Blasts Oil Industry for Deliberately Driving Gasoline Prices Higher
DOBBS: A scathing report tonight blasting the oil industry for deliberately driving gasoline prices higher. The report details a decades-long effort by oil industry executives to boost their profit margins at the expense of hard-working American consumers. Peter Viles reports.</s>PETER VILES, CNN CORRESPONDENT (voice over): With Americans furious about the spike in gas prices and record oil profits, Congress is taking aim at price gouging at the pump. But a blistering new report says the problem is much deeper than that. It portrays the oil industry as devoid of true competition and uninterested in building new refineries.</s>MARK COOPER, CONSUMER FEDERATION OF AMERICA: It's a systematic strategy of consolidating the market, eliminating competition, and then underinvesting in capacity. The oil companies have made it clear they're not going to build enough refining capacity to put downward pressure on price.</s>VILES: The report from the Consumers Union argues the industry has reaped a $100 billion profit windfall -- that's $1,000 a year to the average American family -- by underinvesting in refining capacity to tighten supplies. The report quotes a 1995 Chevron memo that says, "If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery profits." The oil lobby in Washington called the report nonsense, arguing the biggest cause of tight refining capacity is that the refining business underperformed for so long, it's failed to attract investment dollars.</s>ROBERT SLAUGHTER, NATIONAL PETROCHEMICAL & REFINERS: We think it would be very helpful if people would just generally stop scapegoating on this issue and realize that the real culprit here is economic growth, which is a good thing.</s>VILES: Oil executives called to Washington say they are doing what they can.</s>REX TILLERSON, EXXONMOBIL CEO: We're investing heavily $20 billion a year over the next five years to develop new supply.</s>VILES: But that $100 billion budget does not include a single new U.S. refinery. Tillerson told "The Wall Street Journal" this week that building a new refinery would be bad for business.</s>VILES: Nothing bad for business about $3 a gallon gasoline, Lou. The industry last year racked up profits of $120 billion and is well ahead of that pace this year. And I said $3 a gallon, but if you can read over my shoulders, that would be a bargain in California -- $3.46 for the cheap stuff at this station -- Lou.</s>DOBBS: Thank you very much. Peter Viles. The Consumers Union doing the work that Congress now wouldn't have to. They have straightforwardly laid it out. We'll se what Congress does with this new report. Peter Viles, thank you very much. New evidence tonight of how our so-called free trade policies promote virtual slavery in parts of this world. Communist China is using the U.S.-Jordan free trade agreement to flood the U.S. market with cheap clothing produced under inhuman conditions. Kitty Pilgrim reports on free trade.</s>KITTY PILGRIM, CNN CORRESPONDENT (voice over): In Jordan, factories like these make clothing for the American market. An investigation by the National Labor Committee, a privately-funded watchdog group, reports slave conditions where workers are starved, beaten and driven to work for days at a time and often not paid. The report says clothing like this is sold in major U.S. stores. Former workers describe horrible conditions.</s>SAIFUL ISLAM, FMR. FACTORY WORKER (through translator): We started working 8:00 in the morning and we had to work until 2:00 that night.</s>PILGRIM: The labor group says Jordan turns a blind eye to the conditions in the factories, many of which are foreign-owned and operated.</s>CHARLES KERNAGHAN, NATIONAL LABOR COMMITTEE: The factories in Jordan which are exporting duty-free to the U.S., those factories are largely foreign-owned. And maybe the biggest investor would be China. And after China, Taiwan, United Arab Emirates, India, Pakistan. And the Jordanian investment is minor. And the big winner in all of this, which would surprise the American people, is China.</s>PILGRIM: Jordan signed a free trade agreement with the United States in 2001, and sells more than a billion dollars worth of clothing duty-free to the United States. Some in Congress are outraged about the abuses and the implication for American jobs.</s>SEN. BYRON DORGAN (D), NORTH DAKOTA: They do these agreements and then rush off to do the next agreement, and they forget what's in the past agreement. They never, ever monitor them, and that's part of the problem here. And it's unfair to American workers to ever have to compete against people who are worked 120 hours a week, people who are paid virtually nothing. That's not what the global economy should be about, and we shouldn't stand for it.</s>PILGRIM: Senator Dorgan is introducing legislation that would make it illegal to import products from sweatshops.</s>PILGRIM: Those sweatshop products damage American jobs because they undercut workers here in the United States. Now, Jordan says the free trade agreement they signed honors international labor rules. They apparently are not enforcing those rules -- Lou.</s>DOBBS: Free trade, Jordan working, if you will, metaphorically as a duty-free shop, and China holding the mortgage. I mean, it's just -- how dumb can the U.S. trade representatives be? Agreement after agreement, they talk about this, they have no idea of what in the world they're doing.</s>PILGRIM: It's truly unbelievable.</s>DOBBS: And next year Congress gets to have the opportunity to return to its constitutional role and actually become involved in agreements, trade agreements, all agreements, rather than continue this fast-track authority which expires next year, by which we have seen this country run up 30 years of consecutive trade deficits under the name of free trade. Thank you very much, Kitty Pilgrim. Jordan is hardly the only country where cheap foreign labor is exploited under the banner of so-called free trade. The United States has so-called free trade agreements with nine countries that have been cited for inhuman working conditions. They achieve remarkable global competitive advantages by doing so, of course. There are 30 million to 40 million garment workers in the world. Most work in developing countries where labor abuses are common. Coming up next here, Defense Secretary Donald Rumsfeld on defense. A career CIA analyst takes him to task for his statements on Iraq. And the Mexican president's drug withdrawal. Vicente Fox takes another look at that drug legislation that he thought was just really, really an advance for his society. We'll also show an American team at the World Cup soccer tournament. Will you see the American flag there? We'll have that story for you coming right up. Stay with us.