Less, not Cheaper, Gas

A Republican proposal to temporarily suspend state taxes on gasoline may allow people to pay less at the pump, but it does nothing to address the larger problem – Mainers and Americans must use less oil. State lawmakers should talk about fuel prices, but they must do so in light of long-standing energy supply concerns, not just the temporary price hikes caused by Hurricane Katrina.

The problem is that demand for oil, and the products made from it, is out-pacing supply. The situation was made worse when Hurricane Katrina knocked out refineries, pipelines and port facilities in the Gulf of Mexico. Days after the hurricane, gas prices spiked – to more than $3 a gallon in Maine and to more than $6 a gallon in hurricane-ravaged areas.

Republican lawmakers Tuesday unveiled several suggestions to reduce fuel costs. The first was to suspend for 60 days the state’s 25.9 cent a gallon tax to “allow the market to stabilize.” One immediate problem with this solution is that the gas tax, which amounts to $40 million a year, is used to repair state roads and bridges and to fund a portion of the state police.

Second, there is already evidence that the market is stabilizing as refineries and pipelines come back on line in the southern United States. Crude oil prices have already dropped to below pre-Katrina levels. Lower prices for refined products, such as gasoline and heating oil, should soon follow. On Wednesday, U.S. light crude was selling for about $65 dollars a barrel, falling more than 7 percent from the record $70.85 of last Tuesday. The release of oil from domestic and international reserves is also holding down prices.

The release of oil and a proposed suspension of gas taxes do nothing, however, to address longer-term supply concerns.

The U.S. Energy Information Agency predicts oil demand will exceed supply starting in the fourth quarter of this year. Total world demand is expected to be 86.4 million barrels a day, according to the agency, while total world supply is expected to be 85.4 million barrels a day.

Oil reserves are being tapped out and no large new discoveries are expected. That leaves conservation and alternative energy sources as the only viable options.

Both are being addressed in state government. Since 2003, the state has reduced its gasoline consumption by nearly 550,000 gallons by purchasing more fuel-efficient vehicles and reducing travel. This week, the governor stopped using a sport utility vehicle and now rides in a more fuel-efficient sedan.

The state also has a requirement that 30 percent of energy generated here comes from renewable sources. It also provides incentives for alternative energy such as solar power.

Federal energy policy, passed earlier this summer, is lacking in all these areas. A requirement for 10 percent renewable energy was stripped from the energy bill, as was a provision requesting that the president find ways to reduce oil use by 1 million barrels a day. Higher automobile fuel-efficiency standards were not included, although the administration has since proposed a small increase in gas mileage for pick-up trucks, SUVs and minivans.

Cheaper gas may be appealing, but the benefits would likely be short-lived.