Pipeline Dreams: What do you Really Want?

How do you think the government should deal with rising gas prices? How much should lawmakers intervene in the market? Should Americans get a $100 rebate from Congress?

Congress is responding to Americans’ collective groan over high gas prices. Both Republicans and Democrats want to do something to ease the strain on our wallets, but thoughtful energy policy takes time to craft and take effect. Are Americans being realistic about what Congress can do in the short term?

Responding to our pleas

Senate Majority Leader Bill Frist (R- Tennessee) proposed a $100 gas rebate for all low and middle-income Americans. The reimbursement would be funded by taxing oil companies for their inventory of crude oil. Changing the tax code in this way would generate billions of dollars in revenue, which Congress would then dole out to American taxpayers.

Critics of the plan say it is a small Band-Aid for a festering wound of a problem. They say Americans won’t be satisfied by a $100 check that, for many, will only fill one gas tank. Are Americans truly hungry for lasting energy alternatives? Some say yes, and that a check from the government may come as an insult.

Oil companies were insulted by the bill as well. Along with other businesses, they lobbied furiously against the tax hike, and Frist eventually dropped it from the proposal.

However, the plan for the $100 rebate remains. How will Congress fund it? At a total cost of $10 billion, the repayment would require us to borrow money. Lately, we’ve been borrowing quite a bit from China, whose economic growth is partly responsible for the oil shortage and rising gas prices.

Looking at the policy from this point of view, the $100 rebate looks like it could be costly in the future.

It’s also important to note that Frist’s plan represents a shift in Republican philosophy. The Party is typically reluctant to raise taxes for businesses and tends to believe that lower taxes generate economic growth. It came as a surprise to constituents (especially oil companies) when Frist proposed a tax increase that may or may not affect oil prices.

Other bills

Congress has generated a slew of other bills to address the energy crunch, including legislation that would work to prevent unfair gas pricing practices, or, price gouging.

In the House, Representative Heather Wilson (R- New Hampshire) introduced a plan to authorize the Federal Trade Commission to identify price gouging and then investigate and prosecute such cases.

The bill would also empower state attorneys general to bring civil action if they felt their residents were paying unfair energy prices. The penalties could be as much as $150 million and two years in prison for gougers.

More refineries?

Representative Charles Bass (R- New Hampshire) has suggested legislation that would encourage oil companies to build more refineries. The Refinery Permit Process Schedule Act would create a presidential appointee who would guide applications through the federal refinery-approval process.

Republicans have also proposed tax breaks to encourage oil and gas companies to strengthen and expand their infrastructure. The oil refinement and distribution system is fragile in the U.S. - Hurricane Katrina demonstrated this by damaging refineries in the Gulf, thereby slowing production and raising prices for months.

No new refineries have been built in the United States since the late 1970s; so many Republican lawmakers would like to offer tax incentives for development.

What do you think?

How can our government best address energy issues? Should cars and trucks be required to get more miles per gallon? How do we respond to China’s economic boom and demand for oil? What are the consequences of not thinking ahead on energy policy?

For more on gas prices and energy policy, click here. Also be sure to listen to our Facts and Trade-Offs radio show on Oil Energy.

Your input matters

Your representatives DO care what you think. Especially now -- 2006 is an election year and many representatives will be looking to reconnect with their constituents. Let your congressmen and women know what you think! Give your senators a piece of your mind! To find your reps, click here.

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Article Posted on: 5/4/2006