The Skinny

see also background & facts, pro & con, links

What's Up

Gas prices have been on a roller coaster - with peaks of $3 a gallon - since Katrina. Inflation-adjusted prices never reach the highs of the 70's (or as high as European “petrol”), but that’s cold comfort to US families and industries that can be highly sensitive to the price of gas. The energy bill Congress passed into law July, 2005 by most accounts did little to bring down gas prices. But with the political spotlight back on prices at the pump, Congress may take a second look at how to either increase the supply of gas or, less likely, help Americans decrease their demand - anything to ease Americans' wallet squeeze.

What the Debate's About

There are two debates – one on short term solutions and the other the long term. In the immediate future, the question is how to prevent crude oil and gas prices from rising and causing damage and uncertainty on important sectors of the US economy. The long term debate is on how to deal with the possibility that demand for oil is growing faster than supply; as the world keeps using more oil, and the oil industry has a hard time keeping up, the pinch for oil may keep squeezing harder.

A theme in both the short-term and long-term debates is America’s “dependency” problem; all sides generally agree that much of our oil headache comes from the fact that over half of our oil is not home grown, leaving our economy at the mercy of foreign oil markets. Broadly speaking, there are two ways to tackle our dependency – one, to raise the supply of energy at home (Republicans lean this way) – the other, to lower our need for energy in the first place (more of a Democrat way of thinking). A different strategy is to better secure our access to foreign oil, whether through diplomacy or other means.

In the short to medium term Republicans are usually gung-ho about tapping into more oil at home, in particular the Arctic National Wildlife Refuge, a hot button issue with environmentalists who say ANWR should be strictly hands-off. But even some Democrats warm to the idea of opening up off shore reserves or more frequently using the Strategic Petroleum Reserve to ease spikes in gas prices (advocated by Kerry in '04, but nixed by Bush except in cases of emergency, like Katrina). Republicans also tend to be more generous in giving tax breaks to oil companies and refineries to encourage development, while Dems more often than not think big oil already has enough incentives to grow. Finally, a popular policy among everyone - except economists - is anti-price gouging legislation which would fine gas companies for taking advantage of energy crises by hiking prices.

Long term solutions are more complicated; most agree – although they will not happily admit this – that while energy independence is a goal worth working toward, it won’t come easy because we simply use a ginormous amount of oil.

To increase the supply of oil, the Republican Party advocates lowering environmental restrictions on home oil production and refining (the process of making crude oil usable), providing tax incentives for energy development, as well as opening Alaska’s Arctic National Wildlife Refuge (ANWR) to drill for oil. To decrease demand, the Democratic Party prefers stricter fuel efficiency standards and more investment in technologies that will reduce America’s dependence on oil.

There are two points both parties agree on. First, they both see the need to convince foreign nations (particularly in the Middle East) to pump more oil and better meet demand, although neither present a clear picture on how they would do so. There is also agreement that the US should promote the development and use of alternative energy sources, from corn ethanol to hydrogen fuel cells to renewables like solar and air power. But, again, there's not total consensus on how much to spend to promote alternative energy.

Where Things Stand Now

Congress passed a comprehensive energy bill in July, 2005. While it provides subsidies and incentives for energy development - both traditional and alternative, it didn't touch fuel efficiency standards and so will likely do little to bring down Americans' thirst for gas. Katrina pushed Congress to make a second go at easing gas prices, but those measures never made it to the Senate floor for a vote. 2006's spiking gas prices brought yet another round of action on the Hill, but the only bill likely to pass would open up drilling in the Gulf of Mexico. In 2007, democrats promised wide ranging reforms from stricter gas-mileage standards to mandates for alternative energy use, but a final bill is still in the making.

Updated November, 2007

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