Cheney sought to raise oil prices as congressman

His 1986 legislation featured import tax


WASHINGTON - In October 1986, when Dick Cheney was the lone congressman from energy-rich Wyoming, he introduced legislation to create a new import tax that would have caused the price of oil, and ultimately the price of gasoline paid by drivers, to soar by billions of dollars per year.

"Let us rid ourselves of the fiction that low oil prices are somehow good for the United States," Cheney, who is now vice president, said shortly after introducing his legislation.

Oil prices had plunged to $15 from nearly $40 a barrel in the early 1980s when Saudi Arabia flooded world markets, and Cheney argued the tax was needed to stabilize oil-state economies devastated by the collapse.

Other lawmakers, including some Republicans, criticized the Cheney plan and similar proposals as "snake oil" that would throw 400,000 Americans out of work. They also complained then - as President Bush does now - that higher taxes would stall the economy.

Renewed interest in Cheney's plan, which Democrats dusted off and talked about on the Senate floor last week, offers another wrinkle in this year's increasingly politicized debate about gas prices, which hit a record-high national average of $1.76 last week for a gallon of regular.

While gas prices may remain a presidential campaign issue if they do not decline, they are still well below the inflation-adjusted high reached in March 1981 of nearly $3 a gallon.

To deflect charges that the White House has not done enough to bring prices down, the Bush campaign has attacked Sen. John Kerry, the presumptive Democratic presidential nominee, as favoring higher gas prices. "Some people have wacky ideas like taxing gasoline more so people drive less. That's John Kerry," states a Bush campaign commercial. The commercial singles out Kerry's support a decade ago for a 50-cent gas tax increase, part of a deficit-reduction package that Kerry never actually voted for.

Yet the cost of Cheney's oil-tax plan ultimately would have been passed on to drivers and other consumers through higher prices on gasoline and other refined petroleum products. In addition, he, too, advocated for the tax partly because, as he said in a February 1987 statement, it "will assist us in reducing our budget deficit."

Under Cheney's proposal, imported oil bought for less than $24 per barrel would have been taxed with a fee equal to the difference between the cost of that oil and the $24 base price.

According to the Energy Information Administration, the cost of imported oil in the late 1980s and most of the 1990s stayed well below $24, except for a brief period during the first Gulf War. Oil imports cost less than $18 per barrel over much of that time. So, during those periods, the Cheney plan presumably could have led to oil taxes of $6 or more per barrel, driving up demand for domestic oil.

The plan included a complicated formula tying the taxes to gains in inflation and the gross national product. Senate Democrats said if it had been enacted when Cheney introduced it, it would have cost consumers $1.2 trillion in higher prices.

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