Policy And Politics In The Gas Tax Debate

Commentary by Pete du Pont

Presidential wannabe Al Gore doesn't want to take credit for current gas prices. Yet of the myriad things he has taken credit for - the Internet, love canal, Love Story and the economy - it's the one thing he genuinely has some responsibility for. After all, in "Earth in the Balance," Gore wrote that higher fossil fuel prices were desirable as a national energy policy and he cast the tie-breaking vote for 1993's gas tax increase.

Gas prices have skyrocketed. From June 1999 to June 2000 in Michigan the price per gallon went from $1.15 to $1.97, and some communities in the Midwest recently saw gas hit $2.30 per gallon. The average national retail price for unleaded gasoline is more than $1.60 per gallon.

The Clinton/Gore administration has claimed that this steep increase in gas prices is a result of collusion between the Organization of Petroleum Exporting Countries (OPEC) and profiteering domestic suppliers - "Big Oil."

No one disputes OPEC's role in higher gas prices. The price of crude oil has gone from $10.00 to more than $28.00 a barrel due to the OPEC reducing production. But the disparity in regional gas prices can't be explained by OPEC's production decisions. Nor can monopolistic practices by U.S. oil companies be blamed. The Congressional Research Service, the Energy Department, the Federal Trade Commission, and the General Accounting Office all have conducted investigations of "Big Oil" and none found illegal behavior.

Rather, it's the Clinton/Gore team's "energy policy" of land closures, taxes and additive mandates that is to blame for almost all of the regional disparity in gas prices.

The administration has cancelled numerous oil leases - costing the taxpayers millions of dollars in compensation to oil companies. They have maintained a moratorium on drilling on the artic slope in Alaska and off the eastern and California coasts. And they have closed numerous public lands to oil exploration.

The result? During the Clinton/Gore years, U.S. oil production declined from 7.4 million barrels per day in 1990 to 6.5 million in 1997, and U. S. dependence on foreign oil has gone from 46% of our needs in 1993 to 56% today.

Then there are the gas taxes. States have begun to respond to the public's outcry against gas prices by suspending their fuel tax, but not the Clinton/Gore administration. A Republican plan to suspend 4.3 cents a gallon gas tax - the amount the administration increased it - faced a threatened veto and went nowhere.

Finally, there is the EPA's reformulated gasoline mandates. The EPA mandated reformulated fuels to reduce air pollution in certain regions. MTBE was the additive of choice in most places, but ethanol - made from local corn - was selected in midwestern farm states. While both additives increase fuel prices, ethanol is more expensive to make and transport than MTBE laden gas, because it requires a very different manufacturing process. Indeed, the Congressional Research Service estimates the ethanol reformulation adds 25 to 34 cents per gallon - which accounts for the regional price disparity.

The governors of Wisconsin and Illinois requested a waiver from the reformulated fuel mandate, but, despite the fact that an Energy Department memo confirms the CRS's estimates, the EPA declined their request.

If Al Gore becomes President, drivers can expect even higher gas prices. He supports a broad based BTU tax on fossil fuels and removing more public lands from fuel production. Finally, MTBE, a possible carcinogen, has been polluting freshwater streams and reservoirs used for drinking water. The states where it's used are demanding that the EPA remove it as an additive. Under Gore, the much more expensive ethanol, will be the likely replacement.


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