Clinton aims at gasoline prices Rise at pumps spurs review of pricing, release of supplies

April 30, 1996|By Carl M. Cannon | Carl M. Cannon,SUN NATIONAL STAFF

WASHINGTON -- Reacting to spiraling gas prices, President Clinton yesterday ordered a review of oil industry pricing practices, but did not embrace Republican demands to roll back a 1993 federal gas tax increase.

The president directed Energy Secretary Hazel R. O'Leary to study whether recent price increases were caused by collusion in the oil industry and to report back to him within 45 days.

In addition, Mr. Clinton instructed the Department of Energy to begin selling 12 million barrels of oil in the nation's strategic petroleum reserves, thus marginally increasing supply in an attempt to induce a drop in prices.

"I believe these are appropriate steps to take at this time," the president said in a statement. "My administration will continue to monitor developments in this market in the coming weeks."

The American Petroleum Institute, the trade association of U.S. oil companies, reacted negatively to the oil sell-off. In a statement it said the reserve "was not intended to be used to control prices or to dampen normal price fluctuations" but only "to provide Americans a buffer in case of a major oil supply disruption or shortage."

The president's directive did not signal a shift in administrative policy. The report is something Mr. Clinton likely would have received in the normal course of events, and the sale of 12 million barrels -- less than one day's supply -- was authorized by Congress in the budget bill the president signed last week.

But the administration's primary aim, several White House officials conceded, was to blunt Republican political attacks on this issue by demonstrating that the president is not indifferent to the concerns of everyday Americans who have seen the price of gasoline jump from an average of $1.16 for a gallon of regular unleaded to $1.27 in a matter of weeks.

In California, a state crucial to Mr. Clinton's re-election chances -- and one he has visited 23 times since being elected -- regular unleaded averaged $1.55 a gallon and, in some areas, full-service premium exceeded $2 per gallon.

Republican leaders, including Sen. Bob Dole, Mr. Clinton's probable opponent in November, have drawn attention in recent days to the 4.3-cent per gallon increase in the gasoline tax pushed through Congress by the president in 1993. Not a single Republican in the House or Senate supported the change.

In a letter sent to the president Friday, Mr. Dole identified that tax increase as one culprit in the gasoline price rise and called for Mr. Clinton's help in repealing it.

The first response by the White House was to chronicle all the Senate votes that Mr. Dole has cast in support of the federal gas tax, which is now about 18.3 cents a gallon.

But as GOP leaders called for a suspension of the "Clinton gas tax," White House officials huddled in search of a way to defuse the issue. Republican leaders hope privately that they can put the Clinton administration on the defensive -- and deflect attention away from a Democratic-led effort to raise the minimum wage to $5.15 an hour from $4.25.

Democrats champion the minimum wage proposal, which is popular with voters, while Republican leaders have blocked a vote on it. Conceding they have taken a beating publicly over the minimum wage, GOP leaders said they hoped the gas tax would be the answer because roughly 12 million Americans would be directly affected by a minimum wage increase, while many times that many voters purchase gasoline.

"If the Democrats want to do something to help the working middle-class people, this is a way we could do it," said Senate Majority Whip Trent Lott, a Republican from Mississippi. "Give them some relief on gasoline tax increases."

Democratic strategists insisted they were determined to avoid the mistake made by the GOP on the minimum wage issue, which was appearing insensitive to the plight of lower-income and working-class people.

On Sunday, the White House chief of staff, Leon E. Panetta, said the administration would consider lowering the gasoline tax, but only within the context of an overall agreement to balance the budget in the next six years.

Both sides have agreed to this time frame, but not on the spending priorities that would attain it. Mr. Panetta's staff estimates that the 4.3-cent gas tax increase will bring in $25 billion to $30 billion over the next six years. Getting rid of it would require some way of replacing it, either on the tax side or with correlating spending cuts, said Barry Toiv, an aide to Mr. Panetta.

Yesterday, Sen. Phil Gramm proposed raising the money either by auctioning off parts of the broadcast spectrum that are currently unused or by restricting welfare and disability payments paid to immigrants.

"I believe we have a good fighting chance of making it happen," said the Texas Republican.

Pub Date: 4/30/96

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