Below is a letter that Congressman Charlie Wilson (D-OH, 6th District) sent to newspapers in his district and e-mailed to those on his subscription list. For your edification:
The number one thing people want to discuss with me is the price of gas. With gas prices up 130% in Ohio since 2001, I know working families and businesses are hurting badly.
There is no magic bullet and I believe that both long and short term solutions need to be examined.
SHORT TERM:
In the short term, consumers need an immediate break from crushing prices at the pump. This week Congress passed H.R. 6022, the Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act of 2008. If signed into law the measure would suspend the fill of the Strategic Petroleum Reserve (SPR) through the end of the year, as long as the price of crude oil remains above $75 per barrel. The Senate also passed similar legislation. I am eager to get the two bills merged and sent to the President as soon as possible.This is good common sense legislation. The SPR is 97% full. That’s enough to meet our security needs. Filling the SPR takes 70,000 barrels of oil off the market each day. If you put that oil into the market, experts project this could lower gas prices by 5 to 24 cents per gallon. In 2000, just the announcement of an SPR moratorium dropped oil prices in the market from $30 a barrel to $20.
I hope the President signs the bill. I fear he won’t. Democrats have been calling for him to stop filling the SPR to lower gas prices. He recently said that the “the cost-benefit analysis” of immediate action for consumers did not persuade him.
I’m not sure how much more persuading he requires. The Reserve has been tapped before by President Bush, President Clinton, and the first President Bush.
LONG TERM:
Unfortunately, like you, I have more questions than answers when it comes to why gas is so expensive. As we look for long term answers, I believe it’s important we start cutting through the smoke and mirrors and not swallow the old argument that this is simply a situation where supply is not keeping up with demand.The Energy Information Agency (EIA) says just the opposite is true. In January-March 2008, the EIA reported that gasoline supplies outpaced demand. In January and February 2008 we imported more gasoline that we did in January and February 2007. At the same time, U.S. gasoline demand was down by .8% compared to spring 2007. With higher inventories and reduced demand, how can prices still have shot up to nearly $4 a gallon?
At a recent briefing held by my colleague Congressman Bart Stupak of Michigan, I was particularly concerned to find out that as our truckers are hurting for diesel our refineries have been shipping 93,000 barrels a day to Western Europe and 182,000 barrels a day to Latin America. Why are we shipping it overseas when we need it here?
Many people who call me, write me, or stop to talk to me at home want to know why there aren’t more refineries. Indeed, in the last 27 years the U.S. has cut by more than half its number of refineries. A new refinery has not been built since 1976. Like many of you, I believed that the government must be making it too hard to build refineries.
But, during Rep. Stupak’s briefing, I learned of internal documents from Mobil, Chevron and Texaco from 1995 and 1996 that specifically advocate that these companies limit domestic refining capacity in order to drive up prices. And at a hearing before the House Select Committee on Energy Independence and Global Warming earlier this month, executives from the major oil companies testified that none of them has any plans or proposals to build new refineries. This doesn’t make sense to me. Big Oil is enjoying record profits. Exxon Mobil made more than $40 billion last year. If the numbers of refineries are contributing to the alleged supply problem, surely Exxon can afford to build a refinery.
Finally, many people want to know why more oil isn’t being drilled. I’d like to know why of the 42 million acres of federal land currently leased by oil and gas companies, only about 12 million acres are actually being drilled to produce oil and natural gas.
People often advocate for less government, but the sheer volume of unanswered questions surrounding gas prices today makes a great case for increased government oversight. I want to know who has been watching all this time to let such questions go unanswered. Is it possible that the reason our gas prices are so high is, in part, because of good old fashioned corporate greed?
In addition to supporting alternative energy sources, like coal-to-liquid fuel, I argue that a long term solution to protect us from out of control gas prices is to have a good watchdog in place. It is clear to me that increased transparency and oversight are needed as our energy supplies are collected and brought to market. I’m co-sponsoring legislation that will do just that. Rest assured also that I’m seeking answers to all of the questions I raised in this column. Like you, I’m fed up with the high price of gasoline.
As I have said before, its a nuanced problem. And a serious one.
