Joe Pitts, May 30, 2004

There’s no doubt about it. High gas prices are a hidden tax that hurts families and harms our economy.

However, the rhetoric these days hardly reflects the truth about today’s price at the pump. On May 19, the New York Times editorial board said, "During past spikes, oil has cost well over twice that amount in today's dollars. Yes, high fuel costs could ultimately endanger the economic recovery, but there is no reason to believe that they will do so at this level."

Though they may not set any records, today’s rising gas prices should concern us, but not for the reasons many cite.

Lynn Kiesling, an economist at Northwestern University who studies energy markets, attributes this season’s spike in gas prices to three factors -- crude oil prices, existing regulations, and new regulations. In short, these three factors cause supply shortages and fluctuating prices.

According to the United States Energy Information Administration (EIA), the price of gas can be broken down into four categories. The price of crude oil accounts for 46 percent of at-the-pump prices; taxes, 24 percent; distribution and marketing costs, 11 percent; and, refining costs, 20 percent.

Today, a barrel of oil costs around $40 per barrel or about 95 cents per gallon. When worldwide demand for crude oil rises, the per-barrel price goes up, pulling the per-gallon price at the pump along with it. This year, increased demand is driven largely by economic growth in China and the United States. The world’s supply has taken a hit because of civil unrest in Venezuela, another leading supplier of crude oil.

Some blame today’s high oil prices on the Organization of the Petroleum Exporting Countries (OPEC). The Middle East oil cartel controls the production and export of crude oil in the region. Cartels violate the principles of free and fair trade. The U.S. should have made them illegal decades ago. However, even Saudi Arabia’s recent agreement to increase production would not affect us for a while and even then would not offer significant relief.

At some point, we need to stop pointing fingers. Over the past decade, our own restrictive energy policies have hindered domestic production of oil and other sources of energy. Burdensome federal regulations prohibit oil refiners and energy producers from making the amount of affordable gasoline our economy needs. Some of these laws provide sensible environmental protection. Many however, stifle innovation and keep prices high.

We have made ourselves dependent on the mercy of oil cartels and the stability of oil-producing nations.

The United States has the most advanced technology, the toughest standards, and the best workforce in the world. More domestic energy production, not less, will strengthen our economy and the environment. Ultimately, we need a comprehensive national energy plan to meet our nation’s needs and break the cycle of dependence on foreign oil.

This plan should eliminate stifling regulations placed on energy producers and oil refineries. Common sense environmental rules are important. However, when taken to the extreme, they are harmful.

The plan must promote access to different types of fuel, an idea known as "fuel diversity" intended to expand the options consumers have to meet their energy needs. We should promote natural gas, clean coal technologies, nuclear power, and renewable energy sources.

The plan should promote conservation but not mandate it. The introduction of hybrid cars is an example of the type of investment in conservation a national energy plan needs to encourage. I have also been impressed with the advancements made in the use of hydrogen as a fuel source.

It should encourage upgrading of the infrastructure to produce and deliver energy, including the power grid.

The House has twice passed a comprehensive energy plan. It included these components and others to increase our supply of energy here in America.

Currently, the plan is stalled in the Senate. If Washington can ever get its act together, the effects of this energy plan will reach far beyond the price we pay for a gallon of gas. It would lower the price we pay to heat and cool our homes, promote investment in new technologies, offer greater choices for the fuel we use to fill up our tanks, create jobs by allowing the energy industry to expand, and promote a cleaner, safer environment for our kids.

As the prices of gas stay high, it’s hard to deny that this nation is long overdue for a national energy plan.

Congressman Joe Pitts, a Republican, represents Pennsylvania's 16th Congressional District, which includes Lancaster County and parts of Chester County and Berks County.