April 15, 2005

April 15, 2005 | Commentary on Regulation

Is Washington Treating Us Like Chumps At The Pumps?

Gasoline is already more than $2.20 per gallon and climbing, and we're still months away from the high-demand summer vacation season. So why has the U.S. Senate introduced two bills that would raise prices even further?

The first is a new ethanol mandate introduced by lawmakers from the Midwest. Under it, refiners would be required to mix 8 billion gallons of this corn-derived fuel into the gasoline supply each year. A competing version sets the amount at 6 billion gallons. A similar measure mandating 5 billion gallons nearly passed in 2003, so these bills are far from long shots.

If the ethanol requirement passes, it would be good news for Midwestern corn farmers and big ethanol producers such as Archer Daniels Midland, but it would mean yet more costs for the driving public. Keep in mind that the only reason the ethanol industry needs federal help is that ethanol is usually too expensive to compete on its own.

Whether this pork-barrel item would add only a penny per gallon, as some proponents claim, or more, as others fear, the fact that Washington is considering anything likely to increase the cost of gas is especially disturbing.

The other bill is the Climate Stewardship Act, a grandiose effort by Sens. John McCain (R-Ariz.) and Joe Lieberman (D-Conn.) to combat global warming. It would do this by restricting the total amount of petroleum and other fossil fuels that can be used in the U.S.

According to the Department of Energy, the energy-use limits in this bill would add another 9 percent to the cost of gas by 2010, rising to 19 percent by 2025. And that's on top of the cost of other federal regulations scheduled to take effect in the years ahead. Scientific doubts about global warming may be growing, but this bill is sure to get motorists heated up.

Federal laws already contribute enough to the price at the pumps. A host of restrictions make the construction of new refineries very difficult -- the last one was built in 1976 -- and tight refining capacity contributes to high gas prices. In addition, federal regulations dictating the recipes for gasoline make it more expensive to produce, especially in many urban markets.

To state the obvious, the federal government should be looking for ways to make gasoline more affordable in the years ahead, not less. To its credit, the Senate recently agreed to open up Alaska's Arctic National Wildlife Refuge to drilling, which is a step in the right direction. But Washington should not get away with these costly bills that treat Americans like chumps at the pumps.

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

About the Author

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

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