“Today’s hearing on high gasoline prices is like the rerun of a bad movie. It’s up to you to change the finale. Congress must slash oil dependence by supporting the doubling of vehicle fuel economy standards, investing in alternative fuels, rejuvenating our public transportation infrastructure, and paying for it by ending Big Oil tax breaks. The American people would give this ending a standing ovation.”
Below is testimony from Daniel J. Weiss, senior fellow at the Center for American Progress, to the House Subcommittee on Energy and Power on how to combat high gas prices.
The recent spike in oil and gasoline prices is not a first-time event. It has occurred twice previously in the past four years. Fortunately, we are better prepared to withstand its impact because we are using less oil due to the vehicle fuel economy standards adopted by President Obama in 2009.
We are also producing more of our own oil. For the first time since President Clinton, the United States is producing a majority of the oil we rely on to power our vehicles and economy. We are less reliant on other nations for oil and send less of our treasure abroad.
This progress, however, cannot mask the fundamental fact that we rely too much on a single fuel and are thus extremely vulnerable to volatile prices or international events beyond our control. To end the oil price rollercoaster that inflicts real damage to our economy and middle class, we must dramatically curtail our reliance on oil as our primary transportation fuel.
As you know, high oil and gasoline prices slow economic growth and take a real toll on families’ already-strained budgets. Unlike many other commodities, demand for gasoline does not significantly decrease even as prices increase because most people cannot quickly and significantly reduce the amount they drive by changing jobs or buying a new home.
Our last two presidents recognized that there are no quick fixes to reduce high oil or gasoline prices. In 2008 President George W. Bush said that “if there was a magic wand to wave, I’d be waving it” to lower prices.
Last month President Obama said that “there are no silver bullets short term when it comes to gas prices — and anybody who says otherwise isn’t telling the truth.” He also noted that the United States uses 20 percent of the world’s annual oil consumption but has only 2 percent of the reserves.
In lieu of wands, bullets, or slogans, this long-term problem requires long-term solutions. We need a long-term “all of the above” strategy that generates long-term investments in modern fuel economy standards, alternative fuels, and public transportation that can reduce our vulnerability to future oil and gasoline price spikes.
In 2005 President Bush supported this idea when he said, “I will tell you with $55 oil, we don’t need incentives to the oil and gas companies to explore. There are plenty of incentives. What we need is to put a strategy in place that will help this country over time become less dependent.”
President Obama has demonstrated leadership in using less and producing more oil. In 2011, we consumed the least amount of oil since early 2001, and even more savings are imminent as we implement modern vehicle fuel economy standards. We are producing the most oil in at least eight years. In addition, the administration and many in Congress have supported investments in alternative-fuel vehicles, particularly electric passenger vehicles and natural-gas-powered trucks. Congress must act on these proposals.
Unfortunately, the pending House transportation bill would disinvest in public transportation — something that’s essential to us using less oil and protecting families from high gasoline prices. While withholding investments for alternatives to oil, we continue tax breaks for Big Oil companies even though the price of oil is nearly double compared to when President Bush said that such support was unnecessary.
This includes tax breaks for the big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — which made a record $137 billion in profits in 2011 while they produced 4 percent less oil. It makes little sense to continue $4 billion in annual oil and gas tax breaks for oil and gas companies. Instead, we should invest these revenues in helping Americans reduce their oil and gasoline use and save money.
There is a proven tool to provide some temporary relief now from high prices. Selling a small amount of oil from the Strategic Petroleum Reserve in coordination with sales from International Energy Agency reserves would boost world oil supplies. Such a sale has occurred under the last four presidents and has lowered oil and gasoline prices every time. This can cut prices and burst the “bubble” caused by Wall Street speculators driving up oil prices for a quick profit.
Finally, the Commodities Future Trading Commission must finalize the position limits on large Wall Street speculators to reduce their impact on volatile, high oil prices.
Today’s hearing on high gasoline prices is like the rerun of a bad movie. It’s up to you to change the finale. Congress must slash oil dependence by supporting the doubling of vehicle fuel economy standards, investing in alternative fuels, rejuvenating our public transportation infrastructure, and paying for it by ending Big Oil tax breaks. The American people would give this ending a standing ovation.
Daniel J. Weiss is a Senior Fellow and Director of Cimate Strategy at the Center for American Progress.