Cost of Gas Puts Pressure On GOP

A sign in San Francisco shows gasoline priced well above $3 a gallon. Democrats hope to use the price issue against Republicans in the November elections.
A sign in San Francisco shows gasoline priced well above $3 a gallon. Democrats hope to use the price issue against Republicans in the November elections. (By Jeff Chiu -- Associated Press)

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By Jeffrey H. Birnbaum and Steven Mufson
Washington Post Staff Writers
Tuesday, April 25, 2006

President Bush and congressional Republicans are under mounting public pressure to reduce gasoline prices, but they have few if any policy choices that would cut them over the next few months as family driving reaches its annual peak and as the midterm elections near.

Energy experts agree that almost everything that the president and Congress can do to increase gasoline supplies or trim demand would take years to implement. The few short-term options they have would do little to prevent the price of gasoline from reaching a national average of about $3.25 a gallon this summer.

"This is a long-lead-time business; the investment horizon is five, 10 or 20 years," said Daniel Yergin, chairman of the consulting firm Cambridge Energy Research Associates. "There's no switch to pull."

This year, Republicans, who are traditionally more sympathetic to the pleas of Big Oil, are lambasting the oil companies, with some calling for the consideration of a windfall-profits tax on the firms. Aides expect the president to say in a speech today that last year he pushed through an energy bill that was designed to increase domestic oil and gasoline production, and that this year he recommended a slew of incentives for alternative-energy production.

But even the White House is reluctant to promise a quick fix. "The problem has built up over many decades, and it isn't going to change overnight," said Bush spokeswoman Dana Perino. The president's speech in Washington about energy costs "will have some new ideas for short-term solutions," Perino said. But she added: "Nothing is going to be a magic wand that will lower gas prices overnight."

Oil analysts concur that the primary causes of the escalating prices cannot be mitigated by federal intervention. They include the rapidly rising demand for oil in China and India, instability in oil-rich Nigeria, financial speculation about a possible military confrontation with Iran, and U.S. refining capacity's failure to keep up with demand. Refineries had to work overtime last year to make up for the oil shortage that Hurricane Katrina wrought, and only now have they been able to undertake necessary maintenance.

Still, Democrats are hammering Bush and his Republican colleagues for failing to come up with a strategy that would cut prices soon. They hope to harness voter anger over the trend and, by Election Day, turn it against the Republicans who control Congress.

In an April 20 memo to candidates, the Democratic Congressional Campaign Committee recommended that Democrats running for Congress "hold an event at a gas station . . . and pledge that, as a member of Congress, you will fight for families in your district, not the oil and gas executives for which this Republican Congress has fought so hard."

Republicans fired back, accusing Democrats of stonewalling comprehensive energy legislation for years before a bill, which focused on long-term energy incentives, finally passed last year. They also say that the economy remains strong despite the gas price woes. "Democrats have decided to play partisan politics with gas prices in a flailing attempt to distract from the growing economy," Sen. Elizabeth Dole (R-N.C.) wrote to her colleagues.

Still, Republicans at both ends of Pennsylvania Avenue are planning a series of actions aimed at boosting gasoline supplies and reducing prices. GOP lawmakers and Bush administration aides yesterday discussed suspending environmental regulations that are forcing consumers to purchase expensive new gasoline blends with low sulfur levels.

Another option under discussion, which the president has used before, aides said, is to tap into the Strategic Petroleum Reserve as a way of increasing oil supplies and lowering prices. Energy consultants have also mentioned the possibility of cutting federal gasoline taxes, though that approach does not appear to be under active consideration.

Despite the many obstacles to immediate price cuts, lawmakers from both parties are complaining about the high gas prices and demanding that something be done about them right away. Yesterday, House Speaker J. Dennis Hastert (R-Ill.) and Senate Majority Leader Bill Frist (R-Tenn.) sent a letter to the White House asking Bush to direct the Justice Department and the Federal Trade Commission to investigate possible price gouging by oil companies.

Sen. Arlen Specter (R-Pa.) said this week that a windfall-profits tax on oil companies is "worth considering."

Rep. Joe Barton (R-Tex.), chairman of the House Energy and Commerce Committee, joined other lawmakers yesterday in condemning high oil prices by taking aim at oil companies. Barton said his committee will hold hearings into the imbalance of supply and demand. He added that "it troubles me" that Exxon Mobil Corp.'s chief executive received a large pay and retirement package "while refinery capacity continues to lag behind demand in this country."

David Winston, a GOP pollster, said the size of the retirement package of former Exxon Mobil chief executive Lee R. Raymond has added to public outrage over rising gasoline prices. Winston said the multimillion-dollar package made people doubt oil companies' assertions that market forces and not their drive for profits stood behind the run-up in gasoline prices.

Raymond received $48.5 million in salary, bonus and incentive payments last year; he got a $98.5 million lump-sum retirement package in January, when he left the company; and he had accumulated by the end of 2005 $183 million in Exxon shares and unexercised stock options with a net worth of $69 million.

Democrats have seized on the gigantic payout as a symbol of oil company greed. They are offering a variety of proposals that would rein in oil companies, including a tax on windfall profits, an idea the Bush administration has opposed in the past.


© 2006 The Washington Post Company

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