Governors Ask Congress to Probe Gas Prices
By Eric Kelderman
A bipartisan group of 21 governors lashed out at record-high gasoline prices and called for a congressional investigation into whether oil companies are artificially limiting fuel supplies by shutting down refineries.
“We are beyond frustrated. We are angry. We want answers as to why prices at the pump continue to escalate in the absence of new seasonal, weather or world events,” said Connecticut Gov. M. Jodi Rell (R), who along with 15 Democratic and 5 Republican governors suggested that Congress might need to consider new laws or regulations to ensure reliable fuel supplies.
The governors’ letter Tuesday (May 22) to Democratic and GOP congressional leaders turns up the political heat on a pocketbook issue already fueling calls in some state capitols to give consumers a break by lowering state gasoline taxes.
Seeking relief from a record average price of $3.21 a gallon for regular unleaded gasoline, Connecticut’s governor is calling on the Legislature to suspend the state’s 25-cents-a-gallon tax from Memorial Day to Labor Day. Texas legislators are considering a 90-day tax holiday from that state’s 20-cents-a-gallon surcharge. And an Illinois state senator has proposed permanently lowering the state’s 6.25 percent sales tax on gasoline to 1.25 percent, while keeping a 19-cents-a-gallon fuel tax.
The approaching Memorial Day weekend sets off an annual round of hand-wringing over auto-fuel costs as the unofficial beginning of the summer driving season. But gas prices this year have reached new heights, surpassing spiraling prices after two 2005 Gulf Coast hurricanes interrupted supplies as well as the previous inflation-adjusted record price in 1981.
Several states launched price-gouging investigations into gasoline costs after hurricanes Katrina and Rita, and President Bush called on all 50 state attorneys general to join a Federal Trade Commission (FTC) investigation. In the end, nine states reached out-of-court settlements ranging from $200 to $10,000 against roughly 100 individual gas retailers, according to a congressionally mandated report from the FTC.
In addition, New Jersey settled a $373,000 price-fixing claim against the oil company Amerada Hess Corp. And Kentucky Attorney General Greg Stumbo (D), currently running for lieutenant governor, recently filed a lawsuit charging Marathon Oil Corp. with overcharging residents nearly $90 million in the weeks following the hurricanes.
Oil company executives have attributed the current price spike to refinery issues, including routine maintenance, which is limiting supplies of gasoline in the United States.
Citing oil companies’ record profits, Rell said that “it makes no apparent sense to shut down refineries for maintenance as the summer driving season approaches.”
Drew Hammill, a spokesman for U.S. House Speaker Nancy Pelosi (D), said the House already held and will continue hearings investigating gasoline prices. In addition, the chamber Tuesday (May 22) passed a bill applying U.S. antitrust laws to OPEC, the international group of 14 oil-exporting companies, and is considering a bill penalizing price-gouging.
Seventeen Democratic governors also sent a letter to President Bush, asking him to support bills penalizing price-gouging and to ensure that federal agencies are cracking down on anti-trust violations.
Connecticut’s congressional delegation also has asked the federal Government Accountability Office to investigate any possible price manipulation by oil companies. “Consumers should not have to face a predatory market for the gas they need to drive to work, bring their children to school, and carry out day-to-day activities,” said U.S. Sen. Christopher Dodd (D-Conn.)
At the state level, high prices are focusing renewed attention on state gasoline taxes, which range from a high of 42.4 cents a gallon in New York to 8 cents a gallon in Alaska. While Connecticut, Texas and Illinois have proposals to lower state fees on gasoline to spare consumers, other states had been considering increasing their gasoline taxes, the chief source of revenue for much-needed road construction and repair.
Despite record-high prices, the Michigan Legislature is pushing ahead with a proposed 9 cent hike in its current tax of 19 cents a gallon, set in 1997, as part of a $1 billion package for road and bridge building. Citing transportation needs in his state, Republican Gov. Mitch Daniels of Indiana has rejected suggestions to suspend his state’s 6 percent sales tax on auto fuels, as former Gov. Frank O’Bannon (D) did during the summer of 2000, when gasoline soared past $1.50 a gallon.
Governors in Maine, Minnesota, Nebraska and Nevada have put the kibosh on legislative proposals to raise gas taxes, despite calls to boost funds for road construction and repair.
Minnesota Gov. Tim Pawlenty (R) said that now is not the time to make drivers pay more and vetoed a $5 billion transportation package that would have been paid for in part with a 5 cent hike in the state’s 22 cent gas tax, which hasn’t been raised since 1988. Nebraska Gov. Dave Heineman (R) vetoed a $19 million increase in transportation funding that would have been paid for with a 1.8 cent increase in that state’s 28 cent gas tax.
Maine Gov. John Baldacci (D) opposes a legislative proposal that would add a sales tax on top of the state’s 28.3 cent gas tax, and Nevada Gov. Jim Gibbons (R) opposes a legislative package of tax and vehicle fees for road construction.
State and local funding, which makes up about 55 percent of the country’s transportation spending, will have to increase from $75 billion in 2005 to $89 billion in 2015 to keep pace with the nation’s infrastructure needs, according to the American Association of State Highway and Transportation Officials. The group also has said that the federal gasoline tax of 18.4 cents a gallon would have to rise by 10 cents by 2015 to cover a shortfall in the nation’s highway account and to make up for the fast-rising costs of road building.
Governors of the following states signed the letter to Congress: Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, North Dakota, Oregon, South Dakota, Utah, Vermont, Washington and Wisconsin.
Democratic governors of the following states signed the letter to President Bush: Arizona, Arkansas, Delaware, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Michigan, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Tennessee and West Virginia and Wisconsin.
For a chart of state-by-state gas prices, click here.