Politics & Government

Politicians can do little to lower gas prices, but still they try

WASHINGTON — None of the remedies that leading politicians are offering to ease the gasoline-price spike is likely to help consumers anytime soon.

Not suspension of shipments to the Strategic Petroleum Reserve. Not a high-level investigation of gasoline-pricing practices. And certainly not a summer freeze on gasoline taxes.

While all those steps could have merit, analysts say, they're unlikely to slow the march to $4-a-gallon gasoline.

"If you stop filling the Strategic Petroleum Reserve, it would be a smart thing to do. But it's not going to turn anything around," said Frank Verrastro, director of the energy and national security program at the Center for Strategic & International Studies.

Even the biggest boosters of oil company investigations concede that they won't matter much right away.

"It would end up like the last one I sought two years ago," said Sen. Ben Nelson, D-Neb. "You're going to get a stack of papers with no conclusion."

Such realism is hardly stopping a flood of rhetoric, votes and proposals from the political world.

Democratic presidential candidate Hillary Clinton routinely gets cheers when she calls on the Federal Trade Commission to "investigate market manipulation in wholesale oil prices."

Barack Obama also revs up crowds when he urges taking steps to "increase transparency in how prices are set, so we can ensure that energy companies aren't bending the rules."

He lists that and other proposals as "a few short-term steps we can take to ease the burden that families are bearing as a result of our failed energy policy."

But federal agencies have been probing possible price manipulation for more than 30 years — and haven't found much evidence of collusion.

In April 1996, President Clinton was seeking re-election and oil prices were climbing. He ordered Energy Secretary Hazel O'Leary to quickly look into the reasons behind the spike. Six weeks later she confirmed what oil industry officials had been saying: Supplies were low because of a colder-than-normal winter, helping to push up crude oil prices.

Six years later, the Federal Trade Commission began monitoring gasoline prices and in 2004 found: "Both in past investigations and from our monitoring (of prices over the years) we have found that unusual movements in gasoline prices typically appear to have a natural cause."

The call for investigations reached a high level again in 2006 as prices began to jump. President Bush asked the FTC and the Energy and Justice departments to look into rising gasoline prices. He was told that the increases didn't stem from antitrust law violations.

Democrats remain unconvinced; last year Congress gave the FTC more authority to deal with possible market manipulation. The agency is now formally seeking comment on proposed rules; its deadline is June 6, meaning the rulemaking process could be finished by the end of this year.

Another popular quick fix involves freezing the 18.4 cents a gallon federal gasoline tax. Clinton and presumptive Republican nominee John McCain are big fans of the idea; Obama sees it as a gimmick.

Most analysts side with Obama.

James D. Hamilton, a professor of economics at University of California-San Diego, said the gas tax freeze would help only "a little bit" and would reduce prices "much less than 18.4 cents a gallon."' Overall, he said, reducing the tax "would be an inappropriate and ineffective response to the current situation."

The biggest political push in Washington has involved the Strategic Petroleum Reserve, the stockpile created in 1975 to provide insurance against supply disruptions.

The reserve, which can hold 727 million barrels, now has an estimated 702.7 million barrels _more than enough, say critics — and gets shipments of about 70,000 new barrels a day.

The White House is adamant that the reserve must be filled; White House spokeswoman Dana Perino cites its importance to national security. But Congress voted overwhelmingly Tuesday to stop the shipments; the House of Representatives and Senate versions of the legislation have to be reconciled before they can go to the president.

Halting the fill would have little impact on gasoline prices, probably about 5 cents per gallon, according to the Energy Information Administration. That's how much the EIA estimates the price of gasoline rises for every 100,000 barrels of oil put into the reserve.

And that's good enough for Tyson Slocum, director of Public Citizen's energy program.

"Is a nickel a whole lot?" he asked. "No, but it's something."

Not really, countered Rep. Joe Barton, R-Texas, who summed up the view of most independent experts.

"I don't think this bill does anything except show the American people that we want to do something," he said, "but still don't know exactly what it is we can do that makes any sense."


More information about the Strategic Petroleum Reserve.

Read the House version of the bill to suspend shipments.

Read the Senate version.