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Archive for Wednesday, September 21, 2005

Congressional task force to tackle high gas prices

September 21, 2005

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— With retail gas prices breaking the $3-per-gallon barrier this month, a new task force formed by House Majority Whip Roy Blunt, R-Mo., is looking for ways to ease skyrocketing fuel costs.

The Gas Price Task Force will consider short- and long-term ways to expand domestic oil production, increase national refining capacity, promote renewable fuels like ethanol and biodiesel and encourage energy conservation.

Fuel prices are a huge issue in farming states like Missouri and Kansas, where there are long distances to travel and agriculture is important, said Rep. Jerry Moran, R-Kan., one of eight Republican House members Blunt selected for the task force.

"Farmers have virtually no option, and the costs they face are tremendous," Moran said.

High prices at the pump have the full attention of Congress this month as angry constituents are demanding answers to the steep increases.

Lawmakers have asked the Federal Trade Commission to investigate gasoline price hikes, and last week the Senate directed the commission to look into price gouging after Hurricane Katrina. Today, the Senate Commerce Committee is holding two hearings on energy pricing.

While the task force was being considered before Hurricane Katrina struck, the storm's effect on energy prices helped spur the formal launch, said Blunt spokeswoman Burson Taylor.

"The gas price spikes after Hurricane Katrina present a challenge to work toward solutions now to ensure that gas prices come back down soon and do not spike again in the future," Blunt said.

Analysts say there is little that Congress or the task force can do in the short term to ease gas prices. Even before Katrina, oil producers and refiners had been struggling to meet rising demand around the world, particularly in the United States and China.

Energy markets have been on edge for the last two years because the amount of excess oil-production capacity worldwide is only about 1.5 million barrels a day, or less than 2 percent of demand. The United States also has a shortage of oil refineries, which are running at about 95 percent capacity.

"It means that anything that upsets refineries, whether it's a hurricane or a refinery accident, causes shortages of gasoline," said Peter Clark, an associate professor of chemical engineering at the University of Alabama.

Prices spiked on wholesale and futures markets after Katrina knocked out refineries and pipelines along the Gulf Coast that provide about a third of the country's gasoline supplies.

"What Congress needs to be doing is making sure the refinery owners down there have all the resources to get these refineries back on track," said Kevin Forbes, director of the Center for Energy and Environmental Stewardship at Catholic University in Washington, D.C.

Since the task force formed last week, it sent a letter praising the Environmental Protection Agency for temporarily allowing retailers nationwide to sell gasoline and diesel that does not meet stringent summer air-quality standards. The group also asked the EPA to waive rules on the number of so-called boutique fuels refineries must produce to meet clean air requirements.

All the attention on fuel prices comes two months after President Bush signed a $17 billion energy bill that did little to address high gas prices. Some Democrats opposed the bill because they said it failed to require automakers to improve the fuel efficiency of new cars, the single biggest user of oil.

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