White House Scorns Action, Congress in Gridlock as Soaring Prices Push Inflation, Motorists Cry ‘Uncle’
Santa Monica, CA — An 11-cent rise in gasoline prices in one week will put the reins on consumers who would like to spend their $300 to $600 federal tax incentive on something frivolous, like an extra sack of groceries or repairing the roof, said the nonprofit, nonpartisan Consumer Watchdog today. The pain of prices at the pump is only made worse by government’s inaction to curb the financial speculation that is driving oil prices and profiting oil companies at the expense of the economy.
The federal Energy Information Agency reported today that the price of regular gasoline was at $3.722, up from $3.613 a week a go and $3.389 four weeks ago. Diesel’s rise was even higher, from $4.149 to $4.339 in a week.
“Gasoline prices alone are making drivers cry ‘uncle,’ but diesel costs may be an even larger hit on family budgets,” said Judy Dugan, research director of Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer Rights). “Farmers are having to pass through diesel and petroleum-based fertilizer costs, while truckers and shippers face a choice between bankruptcy and passing along the cost of their $600 fill-ups. It’s a no-win for everyone except energy traders and oil companies.”
Consumer confidence is at modern lows, noted the watchdog group, and credit card debt is rising due to both fuel prices and food costs.
“Congress has put forth a bucketful of proposals, but even a modest plan to put some oversight on out-of-control energy trading faces a White House veto, because it’s stuck inside a farm bill that the president dislikes,” said Dugan. “The Senate can’t even get it together to cancel some of the oil companies’ unnecessary taxpayer subsidies. It’s like forcing the cleaning lady to pay a yearly bonus to her CEO employer.”
(See more on Consumer Watchdog’s assessment of White House and Congressional proposals here.)
Consumer Watchdog urged Congress to move swiftly on a resolution urging the White House to stop using taxpayer funds to fill the federal Strategic Petroleum Reserve with record-priced oil. Spiking fuel prices and economic insecurity currently make selling some of that oil a better national security priority. Just halting purchases for the reserve would reduce fuel prices at least slightly and possibly substantially, said Consumer Watchdog. Estimates of the effect range from 3-5 cents a gallon to over 20 cents a gallon.
“It’s crucial for government to move faster on more sources of renewable energy, and better public transportation, but it’s just as important to give help consumers stuck with an auto-based economy until alternatives are in place,” said Dugan. “Calls in some corners for $10-dollar gasoline as a way to bring down consumption ignore the disaster that this would be for the working and middle classes.”
Consumer Watchdog’s proposals for bringing down fuel and energy prices while encouraging stronger development of renewable energy include:
– Action by President Bush to stop adding to federal Strategic Petroleum Reserve and sell from the reserve to stabilize and drive down oil futures price. (Read Consumer Watchdog’s letter to the White House here.)
– Closure of the “Enron Loophole” in commodity trading regulation. A regulatory measure in the federal farm bill (S.2058 by Sens. Dianne Feinstein and Carl Levin) would regulate trading markets to help stop speculative oil pricing. This measure was inserted in the federal farm bill, which Bush has vowed to veto. The regulatory bill should be reintroduced on an emergency basis as a stand-alone bill. Regulators should separately increase the amount of margin funds that most traders must put up in energy markets to help suppress speculation. (See more on Enron loophole and farm bill here.)
– Senate approval of an alternative fuels bill (HR 5351) funded by withdrawing $1.8 billion a year in unjustified taxpayer subsidies to oil companies. This measure, passed by the House, has not been taken up in the Senate, where opponents are using a filibuster tactic to block passage. A similar House measure was removed from the federal energy bill by the Senate last year under pressure from the oil lobby.
– Oversight of refinery operations, including regulation of national gasoline supplies. In the last decade, the average on-hand supply of gasoline has dropped from 30 days’ worth to about 22 days. This makes prices increasingly sensitive to any cuts in gasoline production.
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Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer Rights) is a leading nonprofit, nonpartisan consumer advocacy organization.
