WASHINGTON, DC - The House Energy and Commerce Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), hosted a hearing today to examine rising gasoline prices and discuss solutions to help bring relief at the pump.
“High gasoline prices hit the pocketbook of every business, family, and consumer. To make matters worse, with an economy struggling to create jobs and new income, rising gas prices equate to a tax on everyone," said Whitfield. “This latest surge offers an opportunity to take a look at what is happening in oil and gasoline markets as will as what the federal government can do to help moderate high prices."
Gasoline prices this week are averaging at $3.85 per gallon - that’s over 50 cents higher since the beginning of the year, and $2.00 higher than the day President Obama took office. Chris Milburn, a professional truck driver, described the real-life consequences of high fuel prices for families and businesses, explaining, “Whenever the price of a gallon of diesel fuel increases by a nickel, a trucker’s annual costs increase by $1,000. Such price increases result in an enormous extra burden on the small business trucker whose average annual income is approximately $40,000."
Members and witnesses agreed that the recent price spikes are mostly a result of a strained global supply of oil -due to increased global demand and political tensions in the Middle East. Industry analysts suggested the best way to combat this problem was by increasing supplies. Unfortunately, the Obama administration’s policies have left a majority of our country’s federal mineral resources off-limits to production and the president has blocked a major potential source of increased imports from Canada by rejecting the Keystone XL pipeline.
Jack Gerard, President and CEO of the American Petroleum Institute, said “supply matters," explaining that more domestic production, along with additional Canadian oil supplies from the Keystone XL pipeline, would send a signal to the markets that secure supplies are on the way and help put downward pressure on prices. “Gasoline prices are climbing primarily because the cost of crude oil -which accounts for 76 percent of the price at the pump -also has been rising, pushed higher by global demand and Middle East tensions. These market forces are challenging but America doesn’t have to be held captive by them," said Gerard. “With sound policy and bold leadership, we can put this country’s vast resources to work to change the current energy equation."
Charlie Drevna, President of the American Fuel and Petrochemical Manufacturers, echoed calls for increased North American energy supplies and argued that excessive regulation on fuel producers and refineries is contributing to the problem. “The manufacturers of fuels are being hit with a regulatory blizzard that poses a significant threat to both refinery operations and our nation," said Denva. He explained that while there is no quick fix to high gas prices, there are measurable steps Congress can take today to bring relief. “Producing more oil and natural gas right here in America, getting more from Canada and reducing harmful overregulation can’t take place overnight. But these actions give us our best shot at creating a secure and stable energy supply for American consumers and a manufacturing renaissance and strong growth in America."
In addition to discussing solutions that will work to help reduce prices, today’s hearing also included a discussion on ideas that the experts said will not work -such as raising taxes on energy producers, tapping the nation’s Strategic Petroleum Reserve, and blaming speculators.
Witnesses testified that tapping into our emergency oil reserves will do nothing to stabilize gas prices and will only threaten our national security. “Using the strategic petroleum reserve to counter short-term price volatility absent a severe supply interruption could not only be irresponsible but counterproductive," said market analyst Robert McNally, President of the Rapidian Group.
Rep. Mike Pompeo (R-KS) questioned witnesses about the role speculation plays in driving up prices and asked about the SPR’s ability to bring down prices. Witnesses explained that neither speculation nor SPR sales have much of a lasting influence on gasoline prices because oil markets are driven by long-term expectations of supply and demand. Watch that exchange here :
“None of America’s pain at the pump should be self inflicted, which is why we must do more to increase domestic and North American oil supplies, and to streamline the federal regulatory burden on gasoline," said Energy and Commerce Chairman Fred Upton (R-MI). “On the other hand, pursing non-solutions like tax increases or tapping the SPR won’t solve our need for energy or for jobs."
