Gasoline Prices

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Major Issues

Gasoline Prices

Rising Gas Prices In Vermont And Across The Nation

The price of gas has increased 100 percent in the last five years, and Vermont families, businesses, and farmers are being hit hard by the rise in gas prices. These record high prices mean Vermonters are paying hundreds of dollars a month to fill their tanks with fuel - while oil companies are reporting record profits and making little effort to curb the price of gas.

With gasoline prices nearing three dollars per gallon for Vermonters, oil companies continue to post record profits.

During the first quarter of 2007, the following companies reported astronomical earning increases: Chevron and BP both posted profits of $4.7 billion; Royal Dutch Shell's profits were at $7.3 billion; and Exxon Mobil's profits were a staggering $9.28 billion. There's nothing wrong with corporate profits. But hardworking American families, farmers and small businesses should not be asked to subsidize them. The time for action is now. Consumers need relief at the pumps.

Immediate Action - Sen. Leahy's Legislative Efforts:

As part of a long term solution to reduce our Nation's reliance on fossil fuels, Sen. Leahy has been supportive of many efforts. Sen. Leahy is a cosponsor of Sen. Dianne Feinstein (D-Calif.) Ten-In-Ten Fuel Economy Act, which would increase the fuel economy standards of all vehicles. This legislation would gradually increase fuel efficiency standards for SUVs and sedans to 35 miles-per-gallon by 2019.

Sen. Leahy has also cosponsored a bill by Sen. Evan Bayh (D-Ind.) to reduce American dependence on foreign oil. The Dependence Reduction Through Innovation in Vehicles and Energy Act (DRIVE Act) aims to reduce the consumption of oil in the United States by seven million barrels per day in 20 years. This bill would provide a tax incentive for the development of fuel efficient vehicles and decrease our nation's reliance on foreign energy sources.

Sen. Leahy's Recent Efforts:

Senate Judiciary Committee To Examine
Explosive Rise In Oil Prices
May 7, 2008

Sen. Leahy has urged the Administration to get serious about price gouging, and has supported legislative efforts in Congress that go after price gougers and profiteers. In 2005, he supported a windfall profits tax, to take excess corporate profits and give them right back to consumers in

rebates, or use them to build alternative and renewable fuel facilities. Finally, Sen. Leahy is proud to lead efforts in Congress to make the Organization of Petroleum Exporting Countries - OPEC - accountable for its anti-competitive behavior, and to allow the United States to take decisive action against the foreign oil cartels for the withholding of supplies, price gouging, and other anti-competitive activities.

Resources from the Congressional Research Service:

Gasoline Prices:
Issues for the 110th Congress

The Congressional Research Service provides members of Congress with non-partisan research and analysis of legislation and issues. It's Sen. Leahy's goal to make all of these reports available to the tax payer. You can read more about his efforts here.

In the 109th Congress, Sen. Leahy joined with his colleagues to introduce the Oil and Gas Industry Antitrust Act, which includes NOPEC provisions that could offer prompt relief to consumers from spiraling fuel prices. The bill offered the legal tools to break the back of OPEC's monopoly power over oil supply and prices, which would immediately deter those nations from price gouging. Although the Oil and Gas Industry Antitrust Act was passed out of the Senate Judiciary Committee last year, as it had been three times before, there was no additional action taken by the full Senate.

Oil and Gas Prices in Vermont:

According to the U.S. Energy Information Administration (EIA), crude oil prices are now trading above $65 per barrel. These high crude prices are a major factor behind the soaring cost of gasoline. According to the EIA, the average pump price for regular gasoline in the U.S. was nearing $2.90 per gallon. This is a 10-cent per gallon

increase over last year. This high cost represents a 100 percent increase in the price of gasoline in the last five years. In Vermont, according to the American Automobile Association (AAA), the average prices for regular gasoline is $2.85 per gallon in April. In many places, that price is swiftly approaching $3.00 per gallon.

Price Factors:

Energy experts point to a variety of factors contributing to the high prices. Included most prominently among these factors is that demand remains strong while supply remains tight. Other important factors include market speculation and the perception of short term disruptions in supply. Political instabilities in oil-rich regions such as Iraq, Iran, Venezuela and Nigeria contribute to perceived uncertainties in supply, which can leave oil prices volatile. Reductions in demand for gasoline or oil could occur as Americans switch to alternative energy sources such as wind power, hydroelectric, geothermal, or engage in more conservation activities, or use renewable fuels (such as 85 percent ethanol, fuel cells, or hydrogen). Sen. Leahy has strongly supported research and development funding for these and other technologies. These are solutions that can break our long-term dependence on foreign oil, as well as creating new industries that would strengthen the nation's economy.

But these approaches will not be sufficient in the short run to have a significant downward effect on the current high prices at the pump. In light of the record-breaking profits being made by oil companies, another option Sen. Leahy and his colleagues have been examining is the possibility of a windfall profits tax on oil company proceeds, which could be rebated to American Consumers or invested in these new alternative technologies.

Longer-Term Solutions:

Sen. Leahy is hopeful that Congress and the Bush Administration will act soon to address the immediate concerns about gasoline prices, but the nation needs to develop a new national energy plan for the long-term that emphasizes a clean, reliable, sustainable, and affordable energy policy. We need to push for more fuel efficient cars and trucks by adopting stronger fuel economy standards. These emission standards not only help protect the environment, they also reduce American dependence on oil imports. The current, decade-old standards do not take into account new technology or the increased use of SUVs. We also need to create incentives for more hybrid and alternative vehicles to be build and for more Americans to drive them. Sen. Leahy hopes Congress will adopt additional tax incentives this year to do both. Sen. Leahy is committed to pressing for progress to make the United States a world leader in research in this area.