By Jim VandeHei
August 19, 2005
Washington Post
President Bush and members of Congress are facing an uncomfortable political
reality this summer: They have little to offer Americans to ease their pain at
the pump.
With gasoline prices nearing or topping $3 per gallon in some cities, Bush and
lawmakers would be thrilled to call for steps big and small to quickly take the
pressure off motorists financially -- and themselves politically. The
president's advisers cite high gasoline prices as one reason for Bush's sagging
approval ratings, while lawmakers home for the August break are feeling the heat
from anxious constituents.
But the prices are an economic and political problem for which Washington has
few, if any, policy remedies that would be effective or practical in the near
term, according to many energy experts and elected officials.
"I wish I could say there is a quick fix, but there is not," said Rep. Bob
Beauprez, a Colorado Republican who is expected to face a tough reelection
campaign next year. "Everybody is feeling the pinch."
Sen. Charles E. Schumer (N.Y.) is one of several Democrats who support
releasing oil from the U.S. strategic petroleum reserve. He warned this week
that the soaring prices are "taking money out of the hands of working families."
The idea is to pour U.S. oil into the world market to push down prices. But
energy analysts warn that this move would draw down reserves whose stated
purpose is to protect national security, not to manipulate prices. In any event,
they note, the price drop would be uncertain and would perhaps amount to as
little as a few cents per gallon.
"Gas prices are clearly reaching a level where it's a political problem for
people," said Daniel Yergin, chairman of Cambridge Energy Research Associates,
but "unless you empty [the reserve], it is a very temporary expedient. It does
not affect the basic supply-and-demand problem."
Lawmakers also cannot easily suspend or reduce the 18.4-cent-per-gallon federal
tax on gasoline. That money goes straight into a trust fund for covering highway
and mass-transit upgrades. When gas prices climbed in the 1990s, some
Republicans were quick to call for lowering the tax. This time, however,
Congress has boxed itself in by passing the largest-ever transportation bill
just before leaving for the August recess.
Ronald D. Utt, who studies energy issues at the Heritage Foundation, a
conservative think tank, said there's "a lot of silence" on taxes "partly
because everyone [in Congress] appreciates their pork barrel projects would be
at risk" if gas taxes are cut.
Even if that obstacle could be surmounted, "if you roll back that tax, people
have to keep in mind that may not transfer into savings for consumers," said
American Automobile Association spokesman Mantill Williams. "It's not automatic
[that gasoline firms] will give that discount to the consumer."
Some members of Congress -- and many editorial pages at newspapers across the
country -- have proposed a perennial solution: investigate whether oil companies
are fixing prices to pad profit margins. Politically, oil companies are easy
targets because many are posting high profits as consumers pay more for
gasoline. Rep. Vito Fossella (R-N.Y.) this week called on the government to make
sure "that no price gouging is occurring" in his district.
The investigation avenue might sound good, AAA's Williams said, but every time
the government has investigated, "we have not found anything."
Sen. John F. Kerry (D-Mass.) and others say Bush should take a harder line with
Saudi Arabia and other oil-producing nations, and demand that they release more
oil and help push down the price of oil, which hit a record $66 per barrel this
week. But skeptics say that approach has not worked in the past. "We have to
realize they have the oil, and it's a seller's market," Beauprez said.
Rep. Anne M. Northup (R-Ky.) said she heard from concerned constituents at
every stop this month, including at a gas station in her district, where it cost
her $41 to fill up her Ford Escape, one of the smaller sport-utility vehicles on
the road. She said one of her messages to voters is: Pressure Washington to
allow drilling in Alaska's Arctic National Wildlife Refuge. The energy policy
recently passed by Congress and signed into law by Bush does not permit drilling
in the refuge, but Republicans hope to open this area to drilling as part of
this year's budget agreement.
It would take a long time before oil can be pumped from the ground in the
refuge because oil exploration and the start of production typically take years.
Though ANWR production would slightly reduce the growth in U.S. imports, experts
say, its impact on prices is less clear.
Any additional supply on the world market puts downward pressure on worldwide
prices. But the Organization of the Petroleum Exporting Countries could always
decide to cut production to offset ANWR's output. If that happened, production
in ANWR would have no impact on world prices.
The one area sparking bipartisan interest is requiring automakers to produce
more fuel-efficient cars and SUVs by tightening what is known as Corporate
Average Fuel Economy (CAFE) standards. In the past, lawmakers have sided with
the Big Three car companies in opposing broad increases in CAFE standards, which
require vehicles to get more miles from each gallon. A number of legislators are
now considering plans to increase the standards.
The obvious benefit to consumers is the savings resulting from better gas
mileage. But Ben Lieberman, an energy expert at the Heritage Foundation, noted:
"People aren't going to drive their SUV off a cliff, and run out and buy a more
economical vehicle." He added: "You are talking about something that would take
a decade or more to have an effect." Others say it would take less time, but
still years.
Bush, who signed into law a new energy policy earlier this year, has told
audiences that the measure will not pull down prices now, but will set the stage
for the United States to rely less on foreign oil in the future and more on
domestically produced alternative fuels and on hybrid vehicles.
With many political strategists saying that he is getting lower-than-expected
approval ratings on the economy because of gasoline prices, Bush is talking
about the energy legislation at several stops this month, and administration
aides are exploring possible adjustments of the CAFE standards.
Northup and others are highlighting fuel-efficient hybrid vehicles as another
solution, but they come at a cost.
Consumers looking to buy a new hybrid, such as a Ford Escape that gets an
estimated 36 miles per gallon in the city, will get additional assistance under
the new law. Starting next year, people can claim a tax credit, ranging from
$400 to $3400 depending on the model, for the purchase of a hybrid vehicle. But,
as critics are quick to note, hybrids cost more than traditional vehicles, so
that even with the tax credit, motorists will not gain an obvious financial
benefit.
"The big problem is we did not make the right decisions 10 years ago," said
Brendan Bell, an energy analyst at the Sierra Club.
In the meantime, Yergin said, the swiftest solutions will come not from
Washington but from motorists themselves -- by driving less, inflating tires
properly and carpooling.
Staff writer Justin Blum contributed to this report.
|