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| The Price at the Pump |
March 14, 2000 |
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Dear Friends,
It was $1.499 for regular at the Chevron Station on Alameda where I gassed up on Monday night. It`s worse in other places across the country. Pushing $2.00 in some places. The New Mexico Hotel and Motel Association says that advance bookings for this summer are down, and they think the gas prices are discouraging tourism.
We had a hearing on oil and gas prices in the Commerce Committee last Thursday. Mark Murphy from Roswell came in to testify and we were glad to have him there along with others.
It was clear to me after Thursday that the Department of Energy was slow to react to the oil shortage and doesn`t have an energy policy to deal with the current situation.
The Secretary of Energy admitted as much on February 17th in front of energy industry officials in Boston when he said, "It is obvious that the federal government was not prepared. We were caught napping. We got complacent." (Portland Press Herald)
You have to admire the honesty, but families budgeting for their summer vacations shouldn`t have to pay for the miscalculations of bureaucrats.
The real problem is dependence on foreign oil. In 1998, 52% of US oil consumption was foreign oil, and it is higher now. Estimates are about 55%. That`s the highest percentage its ever been.
We have a tax system that encourages imports and a regulatory environment that discourages responsible domestic exploration and the development of alternative sources of energy.
In February 1999 OPEC announced it was reducing its output of oil because prices were so low. And they did what they said they were going to do. The world consumes about 77 million barrels of oil per day, and worldwide production is about half a million barrels short of consumption. So, refineries and countries started using up their stocks of oil on hand and prices started to climb.
OPEC reduced production a year ago. America didn`t react.
We have some options at our disposal: releasing oil from the strategic petroleum reserve, reducing federal gas taxes, and stimulating domestic supply. More fundamentally, we need an energy policy that reduces our dependence on foreign oil and a federal bureaucracy that acts swiftly before the lines form at the pumps.
I`ll keep you posted.
Wish you were here,
Heather |
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