Anguish at the pump

COMMENTARY Energy Economics

Anguish at the pump

May 19th, 2007 2 min read

Former Senior Policy Analyst, Energy and Environment Thomas A. Roe Institute for Economic Policy Studies

Ben Lieberman was a specialist in energy and environmental issues.

Next time you're filling your tank at $3.40-plus, you can thank Congress. And they're not done yet.

Another spring, another jump in gasoline prices, and another round of ineptitude from Washington.

There's never a good time of year to see Chicago area gas over $3.40 per gallon, but it's particularly worrisome to reach this level in early May. That's because pump prices tend to go up from here as we head into the high-demand summer vacation season.

Of course, Chicagoans have ridden this seasonal roller coaster before: Gas rose above $3 for parts of the last two summers. Only now, the price rise is under way much sooner, and could reach unprecedented levels.

The other change is that this time it is occurring under a Democratic-controlled Congress with a different approach toward energy issues from their Republican adversaries. Unfortunately, the Democrats' ideas offer little hope for relief -- and could make matters worse.

It's not as if the Democrats have a tough act to follow. Republicans tried and failed to expand domestic oil supplies by opening such restricted areas as Alaska's Arctic National Wildlife Refuge as well as the 85 percent of coastal areas that are off limits to drilling.

They also tried and largely failed to streamline the environmental regulations that hamper refinery expansions and make gasoline more expensive to produce.

While failing to enact anything useful, Republicans did manage to pass the pork-laden 2005 energy bill, which is doing more harm than good. In particular, its requirement that expensive ethanol be added to the fuel supply has increased the cost of driving.

The last Congress at least debated a mix of good and bad energy ideas, but the current one has offered up only bad ones. Its main approach is to bash "big oil" and punish the oil industry by raising taxes and other fees on those companies.

Of course, higher taxes on oil companies won't do any more to reduce the price at the pump than higher taxes on bakers would lower the price of bread. And over the long term, tax hikes would discourage investment in what we really need: expanded domestic oil supplies and refining capacity.

Fortunately, the Senate appears to be balking at this approach.

Congress is also considering raising fuel economy standards for vehicles. In theory, we can all save big at the pump by switching to much smaller cars. But plenty of gas-sipping models are already on the market for those who want them. Does the public really want Washington stepping in and essentially forcing this choice on everyone?

The new Congress is also thinking about taking the failed ethanol mandate and increasing it nearly five-fold. The current mandate calls for 7.5 billion gallons of this costly fuel additive by 2012, but bills seek to raise this level to 36 billion or even more. Not only has current ethanol use increased the cost of driving, but the competition for corn between the economy's food sector and fuel sector has raised food prices as well.

Worse, Congress wants to impose new environmental regulations, especially in the name of fighting global warming. Putting aside questions about the seriousness of global warming, doing anything about it will substantially affect cars and trucks. Transportation accounts for one-third of America's emissions of carbon dioxide, and taking steps to reduce these emissions will require raising the price at the pump in order to discourage driving.

How much? Consider that some of Congress' global-warming proposals resemble measures already in place in Western Europe, where gas prices currently range from $6 to $7 per gallon. And even these prices have not reduced emissions in Europe.

Strange is it may seem, despite public anger over high gasoline prices, Washington has all but given up on trying to do anything useful about it. Given the energy proposals making their way through Congress now, the best consumers can hope for is that all of them stall.

Ben Lieberman is senior policy analyst in the Roe Institute for Economic Policy Studies at the Heritage Foundation.

First Appeared in the Chicago Sun-Times