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ECONOMICS -
-

Don't Believe the Oilman-In-Chief

Posted in the database on Thursday, April 27th, 2006 @ 16:01:17 MST (1417 views)
by Frank O'Donnell    TomPaine.com  

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George W. Bush would like to sell you the idea that pesky environmental regulations are keeping gas prices high.

You know President George W. Bush's ratings are in the toilet when he starts bashing oil companies in the name of protecting what he repeatedly called "our consumers," as he did yesterday.

And you know the Party in Power -- just back from getting an earful from angry constituents about rising gasoline prices -- is shaking in its shoes at the prospect of tomorrow's profit announcement by ExxonMobil.

So the president did what a floundering politician does: he tried to change the subject.

In this case, the president made the environment a scapegoat for rising gasoline prices. He suggested a false choice -- lower prices at the pump, or dirtier air.

It was ironic that the president made his gas-price speech before the Renewable Fuels Association, since the president was citing the association's main product, ethanol, as one of the many reasons that gasoline prices have gone up. Actually, most of the price of gasoline is determined by world crude oil prices, and the presidential saber rattling over Iran hasn't helped that. But it's unlikely the president will make a speech in Tehran anytime soon.

Regarding clean air requirements, the president noted that some state officials are requesting temporary waivers of clean-gasoline standards as a means of reducing price pressure. (Pennsylvania requested a waiver earlier this week for gasoline sold in the Philadelphia area.)

A short-term waiver isn't the worst possible outcome, as long as it is extremely limited. But health and environmental groups should and will protest any effort to make long-term weakening changes to gasoline standards.

The real truth is that oil companies could have anticipated this problem and planned for it better. Instead, they are taking advantage of a situation they helped create.

Compare the following presidential myths to the reality:

Myth #1: Clean air standards must be relaxed.

Bush says:

Under federal quality -- air quality laws, some areas of the country are required to use fuel blend called reformulated gasoline. Now, as you well know, this year we're going -- undergoing a rapid transition in the primary ingredient in reformulated gas -- from MTBE to ethanol...

Yet state and local officials in some parts of our country worry about supply disruption for the short term. They worry about the sudden change from MTBE to ethanol -- the ethanol producers won't be able to meet the demand. And that's causing the price of gasoline to go up some amount in their jurisdictions.

And some have contacted us to determine whether or not they can ask the EPA to waive local fuel requirements on a temporary basis ... So I'm directing EPA Administrator Johnson to use all his available authority to grant waivers that would relieve critical fuel supply shortages. And I do that for the sake of our consumers.

The reality is:

In last year's energy bill, Congress actually eliminated the requirement that cleaner reformulated gasoline contain MTBE or ethanol. MTBE makers -- including ExxonMobil -- decided to stop shipping its product after Congress refused to give them a deal absolving these big water polluters from product liability lawsuits. But the companies have known about that congressional decision for nearly a year. They could have arranged a smoother transition to new gasoline blends. But scarcity drives up prices -- and oil profits.

Myth #2: Environmental requirements have blocked oil companies from building new refineries.

Bush says:

There has not been a new refinery built in America in 30 years.

The reality is:

In declaring that part of the problem is that we haven't built new refineries in the U.S. in decades, the president is being simply disingenuous. As he well knows from his days in the business, the big oil companies decided for economic reasons that it was more cost-effective to expand existing refineries than build new ones. In fact, they have managed those expansions to avoid a gasoline glut that could lead to lower prices.

Myth #3: Some mythical entity has created "boutique fuels" around the nation.

Bush says:

The number of boutique fuels has expanded rapidly over the years, and America now has an uncoordinated and overly complex set of fuel rules ... I want to simplify the process for the sake of our consumers.

The reality is:

Some states have adopted specialized fuels -- usually at the request of the oil industry, which has frequently argued in favor of such fuels instead of cleaner gasoline. The oil industry has frequently profited by this seeming confusion.

In last year's energy bill, Congress limited the number of future blends. But the oil industry has not offered to return any of the associated profits to consumers.

The president and Republican-led Congress could have seen the rising gas prices coming miles away. The time to worry about it was last year when they were writing the monster energy bill, loaded with subsidies to energy companies. That's when concrete steps could have been taken to wean America from its oil addiction. Instead, the president is exploiting the public's anxiety over gas prices to advance his own oil-driven energy agenda.

Frank O'Donnell is president of Clean Air Watch.



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