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5TH DISTRICT ARIZONA Column |
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| April 12, 2000 |
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In recent months, those of us in elected office have been implored to "do something" about this rise. There are a couple of things we can and should do. But I don't want to hold out false hope, either. Gasoline is a commodity whose price fluctuates with supply and demand. The US has become a great economic power because we understand the importance - and fickleness-of the free market, and not because we try to fiddle with laws of supply and demand. We have no greater "right" to cheap gasoline than we do to cheap celery or cheap steak. If celery and steak dinners suddenly come into vogue and world supplies decline, I assure you that those prices will increase, as well. Yes, it is always tempting to tamper. No, I won't. The price of gas is dependent on many factors, not the least of which is the Organization of Petroleum Exporting Countries (OPEC) production levels. Also, winter temperatures, world-wide demand and refinery shutdowns affect prices. Part of the recent rise has been orchestrated by OPEC, which found willing partners in cutting production in Russia, Mexico, Norway and Oman, four non-OPEC members. It is important to remember that, even at $2 a gallon (and I hope we don't see that) Americans would be paying less than motorists virtually anywhere. In today's dollars, the national average price of gas was $2.38 per gallon in 1949, $2.02 in 1955 and $2.46 in 1981. It reached a low of $1.10 in 1998. That said, there are federal actions that should be taken in the short-term and long-term to address petroleum production and gas prices. In the short-term, I support reducing the federal excise tax on gasoline. The federal excise tax on gasoline went from 4¢ per gallon -- in effect from 1959 to 1983 -- to 18.4 cents today. Part of this tax includes a 4.3¢ per gallon tax that was initiated for deficit reduction. Since we have achieved that objective and now have a budget surplus, I have cosponsored HR3844 to repeal the 1993 4.3-cent increase in highway motor fuel taxes. I see no reason to continue imposing this deficit reduction tax. But it is the long-term picture that worries me more. We are overly dependent on foreign oil. In 1999, the U.S. used 14.5 million barrels per day of crude oil, of which 41 percent was produced domestically. Twenty years earlier, we used about 14.8 million barrels per day of oil, but at that time 55 percent was domestically produced. Even though our economy is becoming less dependent on oil (because our economy is growing and our oil usage is decreasing slightly), our reliance on foreign oil is increasing. This is why I support increasing domestic energy sources including oil production, renewable and solar energies, and nuclear energy. We should increase federal funding for renewable energy technologies. This is critical to developing a clean, sustainable power source. The current Energy and Water Appropriations bill provides $362.24 million for solar and renewable technologies. This funding will assist research on technologies that help develop clean power sources such as solar building technology, photovoltaic systems, biomass/biofuels, and wind energy. (I supported an amendment to increase renewable energy funding by $30 million, and I am pleased this was adopted.) We can also look to reduce the cost of imported oil by lowering transportation costs. The Jones Act requires that any goods carried between states must be in vessels built in the United States, owned by U.S. companies, and manned by U.S. citizens. The cost of these requirements falls primarily on the consumer because it doesn't allow for the lowest cost shipper to handle the shipment. Eliminating this restriction could reduce the transportation cost of oil and increase the supply of oil in the "lower 48" states. Finally, Americans must come to grips with their obsessive fear of nuclear energy. No nuclear power plant has been ordered in the U.S. in over 20 years. That means our needs are increasingly dependent on fossil fuels. In contrast, France uses nuclear power for almost all of its electricity requirements. Even Japan, the only nation to be attacked with nuclear weapons, uses nuclear power for more of its energy needs than the United States. Greater reliance on nuclear power - and I believe it is safe - would free us from our dependence on OPEC producers. Going to the gasoline station in the Spring and Summer of 2000 is an impoverishing experience, no doubt about it. (It seems like they've added another billing column to the pump's digital display.) But we will make future seasons much more enriching if we heed today's lessons by removing barriers to transportation, encouraging domestic oil production and seeking alternatives to fossil fuels. |