Congress, Clinton debate options to rein in gas prices

But only OPEC can bring short-term relief

March 17, 2000|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- As angry truckers converged again on the Capitol yesterday, President Clinton and Congress found themselves awash in potential responses to the soaring price of oil.

Among the options: cutting gasoline taxes, providing tax credits for oil exploration, more drilling on public lands, more research into alternative fuels, development of energy-efficient vehicles, or curbing Alaska oil exports.

But the only real prospect for short-term relief at the pump remains beyond U.S. control -- with the world's oil-producing cartel.

Clinton told reporters at the White House that he hopes "to have something to say about it in the next few days."

U.S. officials are pushing the Organization of Petroleum Exporting Countries for a decision at its March 27 meeting to increase production enough to drive down crude oil prices this spring.

"I think it is in the interest of the OPEC nations and in the interest of the consuming nations to have a stable price of oil that gives them a fair return but is not so high that it runs the risk of promoting inflation or recession, which will reduce the demand for oil by cratering the economies of other countries and hurting ours," Clinton said yesterday.

Energy Secretary Bill Richardson told a congressional panel Wednesday that he is optimistic that OPEC will respond. But neither he nor Clinton held out any prospect for a quick return to the less-than-a-dollar-a-gallon gasoline prices of last summer.

"What we're trying to very firmly say to OPEC is that what the market needs now is stability," Richardson said. "The market does not need high fluctuations."

He said the administration was seeking a stable midpoint between the low of $10 per barrel that oil was selling for last summer and the $30 or more a barrel on today's market.

Congressional Republicans have been contemptuous of what they call Clinton's "tin cup diplomacy" -- begging for cheaper fuel from nations such as Kuwait and Saudi Arabia which U.S. soldiers defended from Iraq during the Persian Gulf war.

Yet despite the uncertainty of OPEC's help, "That's our first and best shot at relief," said Rep. Albert R. Wynn, a Prince George's County Democrat and one of a half-dozen lawmakers who addressed more than 100 truckers gathered on The Mall.

Organizers of yesterday's protest by independent truckers, the second in two months, had predicted that up to 1,000 rigs might enter the city. But only about 150 showed up to express their disgust over diesel prices that have reached almost $2 a gallon in some areas. Two hundred truckers drove into the city for a protest last month.

Clinton and his advisers met yesterday to consider a series of steps that could be taken to provide short-term relief and help over the long term to reduce U.S. dependence on foreign energy.

One short-term option might involve use of the nearly 600 million gallons of oil saved for national emergencies in the Strategic Petroleum Reserve.

Richardson and some lawmakers in both parties have resisted the idea of drawing on those reserves for what would amount to price controls.

"This is a very valuable resource of ours," Richardson said. "And I think it's got to be used judiciously and wisely."

But the administration is considering allowing domestic oil refiners to participate in a swap program that allows them to draw oil from the reserve now with the promise that they return it with interest -- paid in the form of oil.

Even if Clinton were to allow use of the strategic oil reserve, the impact wouldn't be seen at gasoline pumps for some time.

With the average price of gasoline rising more than 20 cents a gallon since Jan. 1, Republican congressional leaders were initially enthusiastic about repealing the 4.3-cent gasoline tax increase passed in 1993 as part of Clinton's first budget package.

Not only did repeal offer the tantalizing prospect of an election-year tax cut, but it would also let Republicans remind voters that Vice President Al Gore cast the tie vote in 1993 that allowed the tax increase to become law.

"We're thrilled to death to have this issue," said Michelle Davis, spokeswoman for House Majority Leader Dick Armey of Texas. "We finally have something that people care about after a year and a half of not being able to get anything to catch fire."

But at the moment there seems little likelihood that the 4.3 cent rollback will take place.

Republican Rep. Bud Shuster of Pennsylvania, the powerful chairman of the House Transportation Committee, warns that repeal would cost the nation $7 billion in money earmarked for highways and bridges.

Lobbyists for the road-building industry are papering Capitol Hill with charts on how much aid each state would lose each year if the repeal were to pass: $80 million for Maryland alone.

At the same time, according to the highway lobby, a motorist who drives 12,000 miles a year at 20 miles to the gallon would save only $26.

The truckers also have misgivings about cutting a tax that pays to maintain highways.

"It's like burning your furniture to heat your house," said Jim Johnston, president of the Owner-Operator Independent Drivers Association, which organized yesterday's rally on The Mall.

Truckers would rather raise freight-hauling rates, which are set by private contract, he said.

Congress could authorize a surcharge on those rates to cover the cost of gasoline, he added. But that would require the Republican-led Congress to enact what would be seen as a new tax, an unlikely outcome.

The spike in gasoline prices has also reopened the debate about the best approach to long-term energy independence, with each party blaming the other for failure to act.

Rep. Jack Kingston, a Georgia Republican, complained that too many potential oil fields in the United State have been placed off limits in the name of conservation.

The Associated Press contributed to this article.

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