Gasoline Price Update

Between mid-January of 2006 and early February, gasoline prices in the nation for regular unleaded gasoline averaged $2.34 a gallon, up 1.6 cents over the preview two-week period and 48 cents higher from a year ago, based on the US Energy Information Administration's survey of service stations.  This most recent rise in gasoline prices has been caused by increasing oil prices--a market reaction to fears of unreliable supplies overseas--and because several refineries around the nation are undergoing seasonal maintenance work, which reduces production.  Warm winter weather has also brought more drivers to the nation’s highways, increasing demand for gasoline from earlier in the winter.  Gasoline prices reflect the nation’s supply of oil, its price per barrel, the availability of refined petroleum, the ability of the industry to provide supplies to consumers, marketing, and other production costs.  Reduced refining, storage and distribution from 2005 hurricane damage is contributing to the increase of prices this winter for these products.

Natural Gas Price Update

While many homeowners saw record increases in natural gas prices in the month of December, wholesale natural gas prices have fallen since then due to warmer-than-anticipated temperatures in the northeast and Midwest in January and an accompanying decrease in demand.  Like gasoline, natural gas is a commodity, and its prices are highly sensitive to supply and demand.  Natural gas is an increasingly popular source of fuel for power utilities, and over 52% of homes in the US are heated with natural gas.  However, overall supply has been far more limited than anticipated, and as demand continues to grow in the energy and manufacturing sectors for natural gas, consumer costs have continued to increase.

This winter’s natural gas prices also reflect the damage done to ports, wells, pipelines, and other facilities for natural gas production and distribution in the Gulf of Mexico caused by Hurricanes Katrina and Rita.  The Maryland Public Service Commission estimated an increase of about 34 percent on average in total energy costs this winter for Maryland households.  However, many households using natural gas have seen larger increases, while those generating heat from electricity have seen more modest increases.

Congress remains concerned about the impact of high energy prices on our constituents, industries, and other US interests, and we are working hard to meet our growing need to increase the capacity of the US to refine crude oil--and to produce and receive natural gas supplies--so that supply of these products is more reliable and prices become more stable.  We have also addressed complaints of price gouging across the nation.  In fact, Congress has finalized a spending bill for FY 2006 which includes a mandate for a federal investigation into gas price gouging since Hurricane Katrina--in direct response to consumer complaints to Congress from Maryland’s 1st Congressional District and across the country—with results expected in the coming spring.  A Federal Trade Commission investigation into gas pricing in general, ordered by Congress, is also underway.

As Congress works with the Administration and the states to further refine national energy policy, help is available from federal and state agencies to lower home energy bills.  For more information, I recommend that you contact the Maryland Energy Administration at 1-800-72-ENERGY or the US Department of Energy at 1-800-dial-DOE for heating assistance and energy efficiency program information.   The national energy policy challenges we face are complex, and because energy issues are so closely associated with the nation's economy, it is essential for Congress, the Administration, and the states to carefully address them.  This effort is protracted and often frustrating, but it remains a top priority in Congress and in my personal legislative agenda.