Capital Commerce: The Hill's take on pump prices
Everyone complains about high gasoline prices, but is there anything Washington can do about them? A few ideas are beginning to make the rounds on Capitol Hill, but none of them offer much promise of relief to motorists who saw pump prices climb a record 18.2 cents last week to a nationwide average of $2.55 a gallon.
1) Cut taxes? Some oil experts say they've heard from members of Congress who are mulling over proposals to temporarily roll back the federal gasoline tax of 18.4 cents a gallon. Not only could this idea backfire (a sudden price cut could encourage gas consumption, creating more demand and ultimately higher prices), but it may not be the best time for Congress to eliminate a revenue source. That tax is supposed to help pay for the whopping $286.4 billion highway bill lawmakers just approved.
2) Tap the Strategic Petroleum Reserve? Democratic Sens. Chuck Schumer of New York and Jack Reed of Rhode Island are calling for President Bush to release reserves as President Clinton did in 2000 to temporarily ease high oil prices. But the administration is just finishing a historic buildup of the SPR, which began post-September 11, and maintains that the stocks are to be used in times of crisis, not just to relieve pump-price pain.
3) Targeted help? Since high gas prices disproportionately hurt the lower-income consumer, Larry Goldstein, president of the Petroleum Industry Research Foundation, has been pushing the idea of an increase in the earned income tax credit. He estimates that a $300-per-family increase would offset the additional money being spent on gas. But Congress is believed to have little stomach for such a move, since it could open the door to debate on other reform of the income-tax code.
4) More drilling? Surprisingly, Congress did very little to open up new federal lands to oil drilling in the massive energy bill it passed earlier this summer. Lawmakers rejected as politically unpalatable proposals to increase drilling off the coasts. It did not even include the much sought after opening of the Arctic National Wildlife Refuge. Even if Congress did suddenly make such a move, it would take years to bring to the market an amount of oil that would not significantly dampen prices.
5) Raise taxes? Some economists say the only way to really take a bite out of oil prices is to encourage deep cuts in nationwide demand for gasoline, the kind that could only be achieved through a higher tax on gasoline. Don't expect any politicians to take up that cause anytime soon.