SAN FRANCISCO - A new bill designed to soothe inflamed gas prices by boosting refinery output has passed the U.S. House of Representatives, but environmental advocates say the Act is really a gift to the oil industry and would not have significant or immediate effects on prices at the pump.
The bill, Gasoline for America's Security (GAS), eases permitting procedures for oil refineries and offers investment incentives to companies that build refineries. It narrowly passed the House 212-210 on October 7, and though Senate passage is very much in doubt, its House sponsors have vowed to raise many of its components again if GAS is not approved in its current form.
[Gas price] spikes have more to do with the industry's unwillingness to take a profit loss than with refinery shortages or the ravages of recent weather events.
"The legislation is basically a handout to oil companies at an expense to consumers and the environment. It does nothing to stop skyrocketing fuel costs," according to Toby Chaudhuri, the communications director of the Apollo Alliance, a non-profit group advocating a shift from foreign oil to alternative energies.
"America needs an oil change and this bill is out of gas," Chaudhuri said.
While much of the debate over flaring oil costs has centered around supply challenges, earth-friendly groups question this notion.
Instead, they suggest that prices could be brought down faster if Congress focused on preventing price gouging by oil companies, on educating the public to live more efficiently, and on supporting the spread of alternative energy technologies.
Introduced by representative Joe Barton (news, bio, voting record) (R-Texas), GAS bases its recommendations on the idea that the supply deficit comes from a shortage in the number of U.S. oil refineries, which has fallen from 324 in 1981 to 148 today.
Furthermore, the bill's supporters say that damage done to over 100 refinement facilities by gulf hurricanes Rita and Katrina have particularly jacked up prices.
But spikes have more to do with the industry's unwillingness to take a profit loss than with refinery shortages or the ravages of recent weather events, according to Public Citizen, the non-profit consumer advocacy group founded by Ralph Nader in 1971.
"Gasoline and oil prices have been creeping up for two years, in large part because of a wave of mergers in the oil industry," says a statement on the group's Web site posted late last month.
"This consolidation makes it easier for oil companies to gouge consumers at the pumps."
Five U.S. oil refiners now own 56 percent of America's refineries--as opposed to ten companies a decade ago--and profit margins have jumped from 23 cents for every gallon of gasoline refined in 1999 to 41 cents in 2004, according to the group.
According to Tyson Slocum, research director of Public Citizen's energy program, the fastest way to bring down America's gas prices would be to investigate the five biggest U.S. refiners: ConocoPhillips, Valero, ExxonMobil, Shell, and BP.
"We need to have a full investigation--including power of subpoena--over actions of oil companies. We need to make it illegal for these companies to unilaterally withhold product," he said.
While the new bill includes language to "outlaw price gouging," Slocum called this section of the law "weak," saying it offered no real regulatory muscle.
Another bill designed to prevent price gouging during emergencies was introduced concurrently to GAS by a member of the House Energy and Commerce Committee, Bart Stupak (D-Michigan), but was voted down before it reached the House floor.
Many of GAS's proposals originally appeared in the Energy Policy Act, but were removed by the Senate before the Act passed and was signed into law by
President Bush in August.
Some green groups say the oil lobby was only able to pass the measures now by capitalizing on the desperate need for cheap fuel brought on by the hurricanes.
"It borders on obscene to use the devastation of hurricanes Katrina and Rita to ram-through an oil and gas industry wish-list of provisions so extreme that they were rejected just two months ago when Congress debated the energy bill," said Alice Slater, president of GRACE, an environmental research and action center based in New York.
GRACE's public relations director, Chris Cooper, said the bill's passage demonstrated the incredible political clout of the oil industry.
"The real story with this bill is that you had a tragedy occur that disrupted refiners and laid bare that the U.S. is dependent on this consolidated industry and, in a couple weeks, the industry was able to get a bill in the House and get the Congress to actually vote for it," Cooper said.
"It shows how much Congress is in the pocket of the oil industry."
Group director for refining and marketing at the American Petroleum Institute, Edward Murphy, told the Washington Post, however, that the bill was not an industry idea.
"We did not go running up and say, 'Mr. Barton, will you please do this?' We are supportive of it," he said.
Despite the bill's deep opposition, National Petrochemical and Refiners Association President Bob Slaughter said the bill essentially represented "a policy statement that increased petroleum product supplies and more domestic refining capacity are in the public interest."
A number of the bill's provisions were removed during house debates, most notably a proposal to weaken air pollution controls for thousands of industrial facilities. This would have occurred through a rollback of the so-called "new source review" program, which dates back to amendments to the 1977 Clean Air Act.
Rep. Barton, who is Chairman of the House Energy and Commerce Committee, said he would not let the removed measures die.
"I have agreed to do hearings in committee, and go through the regular process, and bring it to the floor later this year as a stand-alone bill or as a part of another piece of legislation," he said.
Chris Cooper of GRACE questioned whether these measures--considered more extreme by environmental advocates--were only included to make other aspects of the bill seem less so.
"Sometimes you have to wonder if the political strategy of the industry is to put in something so damaging to the environment to give cover to moderate conservatives," he said.
Other aspects of the bill would instruct the president to designate new refinery sites on federal lands, perhaps in national parks or retired military bases. The bill calls for the expedited approval of refinery permits by moving legal debates from state and local courts to the U.S. Court of Appeals in Washington D.C, and it would allow refineries to appeal to the government for compensation if operations are stalled by unforeseen regulation or litigation..
No new refinery has been built in the United States since 1976 and memos from the 1990s reveal that major energy companies warned they needed to reduce the number of refineries in order to boost profits, according to Public Citizen.
The bill proposes some pro-environmental measures, like boosting funding for the
Department of Energy's "Clean Cities" program, which provides grants to state and local governments for alternative fuel strategies.
It would also require renewable fuel to be included in gasoline sales so as to reduce oil imports by 2 billion barrels by 2015.
But environmentalists say the "devil is in the details" noting that the definition of "renewable" may include a number of fossil fuels. They criticize the green aspects of the bill as weak and say that the positives do not lessen its negative social and environmental impacts.
Perhaps the most significant critique of the bill is that there is a much faster way to reduce oil prices, according to Lowell Ungar, Senior Policy Analyst at the Alliance to Save Energy in Washington.
"A major part of the solution should be curbing U.S. demand for oil and gasoline," Ungar told OneWorld.
"It will take years to get new refineries built and finding new supply will take even longer. Efficiency is ready right now."
Ungar said that decreasing demand through public education about efficient fuel use would be the fastest way to cut prices, and would not require any significant change in lifestyle.
Not only are efficiency measures able to bring oil prices down faster, but they don't require the removal of environmental laws, result in global warming, or cost the government any additional money, Ungar said.
For instance, ensuring that car tires have adequate air pressure and are not over four years old can save considerable fuel, as well as keeping cars tuned-up and oil filters clean. The U.S. Department of Energy's Web site lists other ways the public can save on fuel.
The "big kahuna" of price slashing, according to Ungar, would be improving car fuel economy, although this would take somewhat longer to achieve. He also highlighted the need to switch to alternative technologies.
A number of tax incentives for the purchase of hybrid cars were included in August's Energy Policy Act, Unger said, noting that incentives should kick in this January and can save consumers up to $3,400 on a new hybrid car.
The Alliance has proposed another policy, called a "feebate," which would apply a "fee" or an extra tax for the purchase of gas-guzzling cars. The fee would in turn pay for rebates to purchasers of fuel-efficient vehicles.