Politicians seek ways to cut price of gasoline

Senate leader orders legislative review

no fuel tax suspension, governor says

September 07, 2005|By David Nitkin | David Nitkin,SUN STAFF

Maryland Senate President Thomas V. Mike Miller ordered an examination yesterday of whether the state should emulate a law passed in Hawaii that limits the price gasoline distributors can charge, as well as copy price-gouging regulations on the books in other states.

As Miller and other Democratic politicians sought ways to lower record-high gasoline prices of more than $3 a gallon, Gov. Robert L. Ehrlich Jr. reiterated yesterday that he has no immediate plans to follow Georgia's Republican governor and press for a suspension of the state's fuel taxes. Pump prices here include a 23.5-cent-a-gallon state tax on gasoline, and a 24.25-cent tax on diesel and kerosene. That is in addition to the 18.4-cent-a-gallon tax levied by the federal government.

Following a brief panic over rumored shortages Friday that led to fuel lines at some gasoline stations, Ehrlich declared yesterday that the state's supply of fuel appears to be sufficient. To lift the tax, he has said, he would have to declare an emergency and call the General Assembly into special session.

There is no pressing crisis that would warrant such actions, he said.

"Whenever you interfere in the market, you have to be very careful," Ehrlich, a Republican, said yesterday. "We're just encouraging people right now to conserve. Stay close to home if you can in the next couple of days."

The legislative review comes as political leaders throughout the country scrutinize the actions of gasoline wholesalers and retailers and ponder regulations to ease the burden on consumers in the aftermath of the impact of Hurricane Katrina on the nation's refineries.

"Do these proposals and laws contain advantages and protections for Maryland consumers?" Miller asked in a letter to fellow Democrat Sen. Thomas M. Middleton of Charles County, the chairman of the Senate Finance Committee. "Are they pre-empted or impacted by federal law? Are the policies being advanced rooted in sound economics in both the immediate and long terms?"

The committee is expected to begin meeting immediately, and proposals could be ready when the legislature reconvenes in January.

Ehrlich and other Maryland leaders have faced days of questions about whether high gasoline prices can be lowered. In Georgia last week, Gov. Sonny Perdue suspended the collection of the state's 7.5 cent-a-gallon fuel excise tax, when gas topped $5 a gallon in the Atlanta area. Georgia also charges a 4 percent sales tax on fuel; gas in Maryland is exempt from sales taxes.

Ehrlich said he is planning announcements in the coming days about strategies to reduce gas prices in Maryland, but that lifting the tax is unlikely to be one of them because it would reduce revenue and threaten the state's ability to repay money borrowed for road projects.

The state collected $753 million in gas taxes in the fiscal year that ended June 30, according to Michael Golden, a spokesman for Comptroller William Donald Schaefer. All but $13 million went into the state's transportation trust fund, and money from the account is used to repay loans for road projects.

Other politicians are urging the governor to take action. U.S. Rep. Albert Wynn, a Prince George's County Democrat, yesterday called on Ehrlich to convene a special legislative session to lift the gas tax.

"Indexed for inflation, we are witnessing rates at the same level as those experienced during the gas crisis of 1979," Wynn said in a statement.

The Hawaii law limits prices charged by two gasoline wholesalers that also own the state's two refineries, as well as by smaller companies that act as middlemen.

F. Peter Horrigan, president of the Mid-Atlantic Petroleum Distributors Association, said a legislative review could provide a greater understanding of how small supply disruptions -- not to mention a once-in-a-lifetime hurricane -- wreak havoc on prices. But, he said, history teaches that public policymakers should not interfere with petroleum economics.

"My only point of reference is 1979," Horrigan said, when the federal government legislated gas allocations and price controls. "Prices went up under price controls, and lines appeared," he said.

Sun staff writer Andrew A. Green contributed to this article.

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