Gas Price Scapegoating

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Mon, 17 Apr 2006 11:15:36 -0400 (EDT)

" American Progress Action Fund "

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Progress Report: Gas Price Scapegoating

 

 

AMERICAN PROGRESS ACTION FUND

The Progress Report

by Judd Legum, Faiz Shakir, Nico Pitney

Amanda Terkel and Payson Schwin

 

 

http://www.progressreport.org

4/17/06

 

ENERGY

Gas Price Scapegoating

 

" We're all in this together, everywhere in the world, " one energy

official testified to Congress last November when asked about rising

gasoline prices. That official was Lee Raymond, the retiring chairman

of Exxon Mobil. Raymond's definition of " all in this together " : You

pay $3.00 per gallon for gas. He racks up " one of the most generous

retirement packages in history, " worth nearly $400 million, " including

pension, stock options and other perks, such as a $1 million

consulting deal, two years of home security, personal security, a car

and driver, and use of a corporate jet for professional purposes. "

News of Raymond's massive benefits has stoked further frustration with

the high prices at the pump. The oil industry's response: blame

renewable energy.

 

THE GAS PRICE SPIKE: Gas prices have soared in recent weeks, jumping

to an average $2.68 per gallon nationally, roughly 40 cents more than

at this time last year. And they're certain to increase further as the

summer driving season begins; the federal Energy Information

Administration last week " predicted a 25-cent-per-gallon rise in

prices nationally this summer over last summer, " when gasoline prices

" briefly increased above an average $3 a gallon nationally when

refineries along the Gulf Coast were shut down " following Hurricane

Katrina. Then, adjusted for inflation, prices were " above records

reached during the oil shocks of the late 1970's and early 1980's.

There were even short-lived gasoline lines as supplies failed to reach

consumers. " This year, prices have risen sharply with crude oil

climbing to $70 per barrel despite the fact that there " have been no

shortages or hurricanes to blame. " The New York Times reports that

Americans " are increasingly facing the fact that inexpensive gasoline,

like airline meals, has become a thing of the past. " Says one AAA

spokesman: " Motorists need to prepare themselves for the possibility

that gasoline will continue to go up each year. There will be peaks

and valleys, but prices will keep going up. " (Find the least expensive

gas prices in your area.)

 

BLAME ETHANOL: Last week, as members of Congress returned home for

spring recess, Big Oil took the opportunity to pass along some

misinformation about why it is not responsible for the high gas

prices. In a letter circulated to every member of Congress, the

American Petroleum Institute (the oil industry's main lobbying group)

blamed current prices on ethanol. The gist of its argument: last

year's energy bill ended an " oxygenate requirement " (oxygenates are

fuel additives " that contain oxygen which can boost gasoline's octane

quality, enhance combustion, and reduce exhaust emissions " ). The oil

industry had previously relied on a noxious chemical called MTBE to

oxygenate its fuel. According to the letter, the end of the oxygenate

requirement was " leading to the phase-out of MTBE " and the phase-in of

ethanol. " While refiners are working day and night to meet this

requirement, " Big Oil told Congress, " they face complicated challenges

in switching to ethanol, which has numerous logistical difficulties in

its transport, " and which is " currently more expensive than gasoline. "

The Wall Street Journal in turn protested the " Ethanol Tax, " stating

that today's higher prices are " the result of the ethanol love-fest

that Congress engaged in last summer as part of its energy bill. "

NBC's Nightly News also featured a segment repeating the oil

industry's line, backed up by analysis from the American Enterprise

Institute, a conservative think-tank funded extensively by the oil and

gas industry, and where Vice President Dick Cheney once served as a

fellow.

 

THE FACTS ON MTBE: The oil industry's letter to Congress is extremely

misleading. First, the energy bill passed last year did not force oil

companies to stop using MTBE; what it did was fail to provide MTBE

producers with legal immunity that would have shielded them from

paying MTBE pollution clean-up costs. (Industry officials had insisted

for years that MTBE was safe to use. In reality, it is a dangerous

pollutant, as its manufacturers have known since the 1980s. In low

doses, its " powerful turpentine taste " makes water undrinkable; in

higher doses, it's likely a cause of cancer. It has already seeped

into the nation's water supply, having been detected " in 1,861 water

systems in 29 states serving 45 million Americans. " ) Because MTBE

makers " were not granted the liability protection they wanted in the

energy bill, they are abandoning MTBE sooner rather than later. "

 

THE FACTS ON ETHANOL: While demand for ethanol will be significantly

high in the short-term, producers say there is plenty of ethanol to

meet the need. There are " currently 97 ethanol production facilities

in operation in the U.S. with the capacity to produce 4.5 billion

gallons of ethanol, " already well ahead of the curve detailed in the

energy bill's Renewable Fuels Standard (RFS). " The RFS called for 4

billion gallons of ethanol to be used in 2006, and that amount of

ethanol was used already in 2005. " Indeed, complaints about the

availability of ethanol from the oil industry are particularly

hypocritical. " For years, the oil companies lobbied Congress to limit

the Renewable Fuels Standard (RFS) for ethanol in the energy bill to

just 5 billion gallons in 2012. But now they are complaining that

there will 'only' be 5 billion gallons of ethanol available in 2006. "

American farmers producing ethanol " say the industry is being

scapegoated for rising fuel prices. " " It's just not true, " says Lee

Reeve, president of Reeve Agri-Energy in Kansas, who has been blending

ethanol for 25 years. " It's just an excuse to drive the price of

gasoline up. Obviously, with or without ethanol the price of gas is

pretty doggone high. The price of crude is high. " In fact, ethanol

will actually make fueling our cars far less expensive. Within ten

years, American farms could produce biofuels at costs equal to between

$0.59 and $0.91 per gallon of gasoline, and $0.86 per gallon of diesel.

 

 

GOOD NEWS

 

Colleges offer increased amounts of financial aid for returning soldiers.

 

 

STATE WATCH

 

NEW HAMPSHIRE: New Hampshire phone-jamming scandal: the next Watergate?

 

CALIFORNIA: Los Angeles battles homelessness.

 

OHIO: Ohio Secretary of State Kenneth J. Blackwell " has accepted more

than $1 million in campaign contributions from employees of companies

seeking business " with his office.

 

ABORTION: USA Today examines the divided state of America on abortion.

 

 

BLOG WATCH

 

THINK PROGRESS: Video: Oprah tackles the minimum wage crisis.

 

MYDD: The push to criminalize undocumented immigrants came directly

from the Bush administration.

 

POGO BLOG: Pentagon violates its own acquisition policies.

 

BOING BOING: President Bush's iPod contains " illegal " music, according

to the RIAA.

 

 

DAILY GRILL

 

" I have seen first-hand how Don relies upon our military commanders in

the field and at the Pentagon to make decisions about how best to

complete these missions. "

-- President Bush, 4/14/06

 

VERSUS

 

" [T]here are signs that [Rumsfeld's] firm grip on the Defense

Department is slipping as some uniformed officers increasingly chart

their own course. Well before the recent calls by a half-dozen retired

Army and Marine Corps generals for Mr. Rumsfeld's resignation, there

was an increasing challenge to his ideas about warfare from within the

senior officer ranks. "

-- Wall Street Journal, 4/17/06

 

 

UNDER THE RADAR

 

MILITARY -- MYERS OFFERS WEAK DEFENSE OF RUMSFELD: This weekend,

former Chairman of the Joint Chiefs Richard Myers attempted to defend

Secretary of Defense Donald Rumsfeld from the increasing criticisms by

retired U.S. generals. (A seventh general, retired Marine Lt. Gen.

Paul Van Riper, added his name to the list of those calling for

Rumsfeld's resignation.) Among their many frustrations, the retired

generals have argued that Rumsfeld rejected the military's advice and

sent in too few troops to secure post-war Iraq. In trying to defend

Rumsfeld, Myers was forced to concede that senior administration

officials had been wrong to criticize former Army chief Gen. Eric

Shinseki before the war for saying that the mission could require

" several hundred thousand soldiers. " " He was inappropriately

criticized, I believe, for speaking out, " said Myers. But Myers

disingenuously claimed that when Shinseki made his assessment of troop

levels, he merely " pulled a number out " of thin air. In truth, as

retired Maj. Gen. John Batiste, who led the 1st Infantry Division in

Iraq, has said: " Our senior leadership chose to radically modify 12

years of very deliberate planning with respect to Iraq. Previous

planning identified the requirement for three times the level of

forces that we committed into Iraq to take down a regime and then

build the peace. "

 

TAXES -- BUSH USES TAX DAY TO PUSH FOR MORE TAX BREAKS FOR THE

WEALTHY: Over the weekend, before tax filings were due, President Bush

used his radio address to ask Congress to extend his tax cuts

permanently. " Tax relief has done exactly what it was designed to do, "

Bush said. " It has created jobs and growth for the American people. "

But the Los Angeles Times found that as the tax code's progressivity

decreased under Bush, " tax rates have contributed to huge increases in

the wealth of the wealthy, but so far most people haven't seen

significant economic improvement. " " It's as if Santa Claus dropped

bags of money down everybody's chimney, " said the Tax Policy Center's

Leonard E. Burman. " Only he dropped extra-big bags in rich people's

homes, and extra-small ones in smaller homes. " One recipient of

Santa's largest " bags of money " this year is Vice President Dick

Cheney, who reportedly is entitled to a $1.9 million tax refund. The

disparity between the wealthiest Americans and everyone else has

grown. " Last year, for example, a typical corporate chief executive

officer made 279 times the average pay of a non-supervisory production

worker, " according to an American Progress report. Meanwhile,

conservative senators are using budget gimmickry to mask the deficits

that more tax cuts for the wealthy would create. " That's amazing, " the

Washington Post's editorial board writes, " even from this Congress. "

 

ENERGY -- BRITISH PETROLEUM MAINTAINS PERILOUS ENVIRONMENTAL AND LABOR

SAFETY RECORD: In 2000, British Petroleum (BP) adopted a new " green "

public relations strategy, changing their slogan to " Beyond Petroleum "

and their logo to an environmentally-friendly flower image. The BBC

called it " part of a rebranding exercise...which the company hopes

will boost profits. " Six years later, BP's profits are surging -- up

25 percent last year to $22 billion -- but its image is taking a

deserved beating. As criminal investigators continue to examine BP's

March 2 spill in Alaska -- " the largest ever on the North Slope " --

where " an estimated 201,000 gallons, or 4,786 barrels, of oil

[dirtied] nearly two acres of tundra, " the Wall Street Journal reports

that BP has discovered another pipeline break on the North Slope

caused by corrosion. " We are at the point where there is so much

damage to the lines from corrosion, we don't know where another leak

will occur, " said Marc Kovac, a BP worker and steward of the United

Steelworkers of America local at Prudhoe Bay. A 2005 safety audit

obtained by the Financial Times shows that BP " deferred maintenance

and delayed repairs to the extent that staffers concluded equipment

was in a 'dangerous condition.' " BP remains under investigation for a

2005 explosion at a Texas City refinery that killed 15 people and

injured an estimated 500.

 

 

THINKFAST

 

Senate Cover-Up Committee Chairman Pat Roberts says his intelligence

panel has " not made…progress on our oversight of Iran intelligence,

which is critical. " The panel has done only piecemeal scrutiny of the

spy agencies' work on Iran. " There is no organized committee staff

effort to look at Iran right now, " says majority staff director Bill

Duhnke. " It's all sort of on hold. "

 

48: The number of U.S. military deaths in Iraq for the first half of

April, a sharp increase from the 30 casualties last month.

 

As seven retired generals call for Rumsfeld's resignation, the

Secretary's " firm grip on the Defense Department is slipping. "

Officers are increasingly questioning Rumsfeld's judgment, " publicly

questioning or quietly trying to undo some of [his] initiatives. "

 

British Prime Minister Tony Blair has canceled an upcoming U.S. visit

to avoid being photographed with President Bush, claims The Huffington

Post. Blair decided the photo op would be " too toxic for his image. "

 

The federal income tax has become less progressive over the course of

the Bush presidency. The Los Angeles Times asks, " Has leveling out

federal income tax rates produced a cornucopia of financial benefits?

The answer is probably yes -- if you're a millionaire. And probably no

-- if you're almost anyone else. "

 

Congress leans on CPAs. When it comes to their own tax returns, many

members of Congress who specialize in writing tax laws -- including

three of the top four lawmakers on the Senate Finance and House Ways

and Means committees -- turn to professional preparers rather than

completing the paperwork themselves.

 

Conservatives in Congress are resorting to gimmickry to try to extend

the Bush tax cuts for the wealthy. " A Senate rule designed to make it

harder to increase the deficit would be circumvented with a maneuver

that would end up increasing the deficit. And a tax cut for wealthier

Americans that would cost $50 billion over 10 years would be `paid

for' in part by another tax cut for the well-off, which would end up

costing billions more. "

 

Bush orders national parks to " to show that they can function at 80

percent or less of their operating budgets. " " But park officials in

the field said the initiative was forcing `gut-wrenching' decisions

that visitors will notice. "

 

A revolt over " emergency " spending: " Senate appropriators have

inserted language into the fiscal 2006 supplemental spending bill

chastising the Bush administration for using the now twice-yearly

`emergency war' supplementals as a shadow appropriations and policy

process. "

 

And finally, Time Magazine lists the ten best and five worst U.S.

Senators. Among the worst: Sen. Wayne Allard (R-CO) (who " is so bland

that his critics have dubbed him `Dullard.' " ), Sen. Mark Dayton (D-MN)

(for his " erratic behavior " ), and Sen. Jim Bunning (R-KY) (who " shows

little interest in policy unless it involves baseball. " )