GAS PRICES CONTINUE HIGH LEVELS IN CALIFORNIA
Mike Blake  /  Reuters file
A driver fills his tank in San Diego on Tuesday. California leads the nation with the highest prices for gasoline.
By Tom Curry National affairs writer
msnbc.com
updated 3/30/2004 5:56:31 PM ET 2004-03-30T22:56:31

It’s natural that the election-year scrimmage over energy policy is focused on reducing the price of gasoline at the pump, a fact of life every voter understands right away.

If the only thing that Congress and President Bush wanted to do was reduce the cost of gasoline, they could take steps such as drawing oil from the Strategic Petroleum Reserve, as President Bill Clinton did in October of 2000 and as Senate Democratic Leader Tom Daschle proposed Tuesday should be done again.

Congress could even cut the 18.4 cents-per-gallon federal excise tax on gasoline, a step Republican presidential candidate Bob Dole proposed in 1996.

Playing the Dole role this year, Democratic presidential candidate Sen. John Kerry, through his campaign press releases, has berated Bush for not moving to cut the gasoline tax.

The professed goal of both Kerry and President Bush is a lower price at the pump.

But the partisan furor over gasoline prices partly obscures the goal of reducing U.S. dependence on foreign oil and cutting the flow of funds to terrorist groups.

Both Republicans and Democrats say they want to reduce American dependence on foreign oil, but since 1993 have not been willing to do things that would work toward that goal: raising gasoline taxes, which would cut consumption, and opening the Gulf of Mexico, the coastal plain of the Arctic National Wildlife Refuge, parts of the Pacific Coast, and more federal lands in the Western states to oil and natural gas exploration.

Veteran energy analyst Philip Verleger also supports a higher tax on gasoline, pointing to studies that suggest a $2 per gallon tax could decrease gasoline use by as much as 2 million barrels per day, representing a 10 percent cut in U.S. oil consumption.

Reminiscent of 1996 and 2000
The current bickering over the price of gasoline — reminiscent of similar strife in the 1996 and 2000 presidential campaigns — reflects the unwillingness of both parties and regional interests in Congress to make tradeoffs to guarantee a more secure fuel supply.

“It is not smart energy policy to wait until crises erupt and then have short-term solutions that don’t get to the real issue,” said Mark Hopkins, vice president of The Alliance to Save Energy, a Washington advocacy group that promotes energy efficiency.

“The price of gasoline is merely symptomatic of a long-term lack of focus on making our transportation system as fuel efficient as possible,” Hopkins said.

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The Alliance favors some provisions of the pending Senate energy bill, including tax incentives for consumers to buy fuel-efficient hybrid vehicles.

Verleger, who sees energy as a national security matter, argues that expanding domestic oil supplies should take precedence over political jockeying.

“In this era of terrorist threats, a grand bargain that ignores political issues is required,” Verleger wrote in an analysis in January. “President Bush lost all credibility for his energy program when he declared offshore areas in Florida to be sacrosanct. He should begin by opening those waters. Congress and the governors of the western states should respond by agreeing to the controlled and safe development of reserves in the West, including the Arctic National Wildlife Refuge.”

Stymied for two years
But Bush and Democrats in Congress have been stymied for two years, unable to strike a deal on energy legislation.

A crucial point of contention last November when the Senate rejected an energy bill was a provision giving protection from lawsuits to companies that produce MTBE, a fuel additive that helps gasoline burn more cleanly, but which has contaminated drinking water supplies in parts of the country.

On Tuesday, Senate Majority Leader Bill Frist, R-Tenn., told reporters that the current price of gasoline “reflects the fact that we haven’t passed an energy bill. To me, that reflects the fact that two out of three Democrats voted against a comprehensive energy bill (last November). Some Republicans did as well, but most of it was stopped by the Democrats.”

Senate Energy Committee Chairman Sen. Pete Domenici, R–N.M., has introduced an energy bill that does not contain the MTBE-protection provision, but the House of Representatives retains MTBE protections in its bill.

On Tuesday, Frist did not sound any note of urgency about passing a bill. “Sometime before this session is completed, we need to address energy,” he said, but did not set a date for debate and a vote.

Daschle: Prod OPEC
For his part, Daschle urged Bush on Tuesday to call on OPEC nations in the Middle East to produce more oil. “For them to limit the amount of production is reprehensible, given what we have done in the region to provide for the stability militarily, as well as to ensure their continued operations…. They owe us more cooperation with regard to supply than they’ve given us.”

Daschle also called for more federal support for corn-based ethanol to replace gasoline, and asked Bush to join him in dropping proposed MTBE industry legal immunity in a final bill passed by both houses of Congress.

“If the advocates of the MTBE industry cannot be convinced to drop their insistence on including in the bill liability protection for those in the industry whose product has polluted groundwater, I hope you will join me in splitting off the ethanol provisions and passing them on their own,” Daschle wrote Bush.

Ethanol’s virtues are debatable, with some scientists saying it requires more energy (in the form of petrochemical herbicides, fertilizer and fuel for tractors) to produce a gallon of ethanol than is contained in a gallon of ethanol.

If ethanol is debatable, so too are other steps that may seem sensible, but might have unwelcome side effects.

Increasing the corporate average fuel economy standard, which auto makers must meet, is intended to make vehicles more fuel efficient. CAFE standards are currently 27.5 miles per gallon for cars and 20.7 mpg for light trucks.

Side effects of fuel efficiency
But in a report published this month, the Congressional Budget Office estimated that “a 10 percent reduction in gasoline consumption could be achieved at a lower cost by an increase in the gasoline tax than by an increase in CAFE standards. Furthermore, an increase in the gasoline tax would reduce driving, leading to less traffic congestion and fewer accidents.”

Such a tax increase has few vocal supporters in Washington. Even those such as Kerry who once supported an increase are now sprinting in the opposite direction.

Kerry as said that he supports increasing the CAFE standard to 36 mpg by 2015. But the CBO report says higher CAFE standards could worsen traffic congestion and increase the number of traffic accidents.

“Those undesirable outcomes could occur because such standards would lower the per-mile cost of driving, providing new-vehicle owners with an incentive to drive more,” the report noted.

It is an increase in the gasoline tax — that unwanted orphan of energy policy — that the CBO sees as “the most direct way to reduce gasoline consumption. By raising the price of gasoline to consumers, a tax raises the cost of driving and encourages consumers to buy more fuel-efficient vehicles.”

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