April 28, 2006
Friday

WASHINGTON - The remedies prescribed by the nation's political leaders this week in response to $3-a-gallon gasoline might hold political value. But they largely ignore the nation's addiction to oil, raising doubts among economists that they will accomplish their goal.

Though everyone agrees that the nation's economic well-being, its environmental health and perhaps its national security depend on reducing its reliance on foreign oil, the election-year rhetoric from Washington carefully avoids any suggestion that Americans - who hold about 2 percent of the world's known oil reserves and consume about 25 percent - take any steps to cut back their use.

"We want fossil fuels. We want oil. We want gas. We want nuclear. We want renewable. We want wind," Sen. James Inhofe, R-Okla., declared Thursday, reflecting the widely held belief that plentiful energy is an American right.

Behind the finger-pointing at environmental regulations and corporate greed, most politicians understand the straightforward economic reasons that gas prices are rising.

Asked on Thursday why gasoline prices are so high, House Democratic leader Nancy Pelosi of San Francisco stated the obvious: "There just hasn't been enough forward thinking to reduce our dependence on gasoline, and that is why the demand is high and therefore the price is high."

That was Pelosi's answer when she talked to a group of children in her office on Take Your Daughter or Son to Work Day.

Moments earlier, speaking with reporters before a bank of television cameras, she had a more politically charged explanation:

"The cost of corruption is so clear in the cost at the pump," Pelosi said, blaming her Republican counterparts and the "oil people" in the White House for cozying up to "big oil and the wealthy few."

The political combustibility of blaming the oil producers is so strong that many Republicans, including President Bush and House Speaker Dennis Hastert, have joined the call to investigate pricing strategies and profits, prompting a defensive outcry from the business community.

The editorial page of the Wall Street Journal ridiculed "Denny Pelosi" and "San Francisco Republicans" this week for playing politics at the oil producers' expense, stating that "Republicans can blame business all they want for high prices, but sounding like liberal Democrats won't save them in November."

Even if investigations reveal collusion or malfeasance, few economists believe such activity is the main cause of high prices.

"The oil companies may be raising it a few cents, but that's not where the action is," said Severin Borenstein, director of the University of California Energy Institute.

More important factors are limited refining capacity, uncertainty about world markets and a seemingly insatiable demand for gasoline. Investment in alternative fuels or domestic drilling might boost energy supplies down the road, but the quicker way to get prices to drop would be to curb demand, something politicians believe that Americans aren't ready to hear.

"There seems to be no political traction for reducing demand," Borenstein said. "Consumers don't want to hear about making any changes from the plentiful gasoline of the 1990s. And unfortunately, short of colonizing the Middle East ... there isn't a way back to that."

The determination to keep energy flowing was evident this week when Bush declared the nation must break its addiction to oil, then promptly announced that energy suppliers are being investigated to make sure the addicts - American motorists - can purchase their fix at a fair price. The next step, he said, is to boost production so energy junkies can support their habit more cheaply.

Meanwhile, Democrats, who for years have preached the virtue of getting the oil monkey off consumers' backs, raced from news conference to news conference, sometimes in gas-guzzling sport utility vehicles, to decry the one development that is most likely to cut back gas consumption: rising prices.

Americans have grown accustomed to relatively cheap gas, which spurred a booming market in SUVs. For most of the past 20 years, retail gasoline prices in the United States have been at their lowest levels since 1919, adjusted for inflation, according to the Federal Trade Commission. Only over the past few years have prices doubled, prompting a slowdown in SUV purchases and a leveling off of consumption.

Lower fuel consumption has its benefits. It is good for the environment, easing air pollution, global warming and traffic. However, the rising price poses a risk to the economy and a particular hardship for low-income workers who find it increasingly difficult to fill their cars with gas and to buy products whose prices rise along with the cost of energy.

Some economists, including Borenstein, recommend raising gas taxes as a way to depress consumption and using the revenue to assist those who cannot afford the higher prices.

"People need to feel as though things have changed, and this is not an anomaly that will go away next week," said Therese Langer, transportation program director for the American Council for an Energy Efficient Economy.

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