Book Description

As major energy legislation moved to conference, the high price of gasoline remained a major consideration. The legislative proposals of past Congresses have contained numerous provisions that would affect gasoline supply and demand. This is true also of the Energy Policy Act of 2005, H.R. 6, both the version passed by the House April 21, and the Senate bill, passed June 28. A large number of factors combined to put pressure on gasoline prices, including increased world demand for crude oil and US refinery capacity inadequate to supply gasoline to a recovering national economy. The war and continued violence in Iraq added uncertainty and a threat of supply disruption that added pressure particularly to the commodity futures markets. Numerous provisions in legislative proposals in the 108th Congress addressed perceived problems in the oil and gasoline markets. A comprehensive energy policy bill was reported out of conference and approved by the House, but several issues kept the bill from passing the Senate. Among the most controversial were provisions regarding the use of ethanol and the additive methyl tertiary butyl ether (MTBE) in motor fuel, proposals to open up part of the Arctic National Wildlife Refuge (ANWR) to oil and gas development, measures concerning corporate average fuel economy (CAFE) standards, and proposals to aid construction of new refineries and to harmonise state "boutique fuels" standards. In the 109th Congress, the House passed a comprehensive bill, H.R. 6, with many of the same provisions of the bill considered in the previous Congress. As before, MTBE and ANWR, included in the House-passed bill, remain controversial. The House bill added another controversial provision, giving the Federal Energy Regulatory Commission (FERC) overriding authority over state entities in licensing terminals to receive and process liquefied natural gas. In the Senate version of H.R. 6, the MTBE safe harbour provision has been omitted. The Senate bill contains a provision, not in the House-passed version, directing the President to take measures to reduce total demand for petroleum by one million barrels per day (mbd) by 2015. An amendment by Senator Cantwell, which would have set the goal of reducing petroleum imports by 40% by 2025, was defeated on the floor by a vote of 47-53. The gasoline price surge heightened discussion of energy policy, but the urgency of previous energy crises has been lacking. In part this may be due to the fact that there has been no physical shortage of gasoline, and no lines at the pump. In addition, the expectation of former crises, that prices were destined to grow ever higher, has not been prevalent. However, the persistence of high gasoline and oil prices into a second summer has raised alarms over the economic consequences of the situation.