Maine delegation set to act on high gas prices

AUGUSTA – Congress is poised to pass several bills aimed at the high price of gasoline, including measures sponsored or co-sponsored by members of Maine’s congressional delegation.

“This recent surge in gasoline prices has imposed an undue burden on Maine families and businesses,” said Maine’s Republican Sen. Olympia Snowe, the senior member of the state’s congressional delegation. “I think we need to take some very strong action and soon.”

She said several bills are pending in the Senate and House that are aimed at addressing both the short-term price increases and the long-term energy dependence of the United States.

“It’s long overdue for Congress to enact a federal price gouging law,” Snowe said. She said the CAFE fuel-efficiency bill reported from the Senate Finance Committee earlier this year did include price gouging legislation and should be considered as part of a new energy bill she hopes the Senate will consider next month.

“We passed legislation at the beginning of the year that repealed the $14 billion in tax breaks Congress had given the oil companies,” said Second District Rep. Mike Michaud, a Democrat. “The Senate needs to do the same. ”

He said the tax breaks given the oil companies are “absurd” and they should be repealed as soon as possible.

“The energy price gouging prevention act will give the Federal Trade Commission the authority to investigate and to punish companies that artificially inflate the price of fuel,” Michaud said. He is a co-sponsor of that legislation.

A study by the Consumer Federation of America indicates the average American household is already paying $1,000 a year more for gasoline than they did five years ago. Rural households are the hardest hit, the study indicates, because they spend nearly 20 percent more for gasoline than those that live in the urban areas of the country.

“People in the Second District can’t afford the price increases they have seen for gas,” Michaud said. “Congress must act to make sure the oil companies are not price gouging.”

Republican Sen. Susan Collins agreed and said that even though price gouging enforcement has been traditionally done at the state level, the congress should consider whether the federal role should be strengthened.

“There are a number of steps that Congress should have already taken, but has not,” she said. “It is absolutely outrageous that our tax system is subsidizing oil companies that are making record profits.”

Collins agreed with Snowe that several measures dealing not only with current prices, but the need for long-term efforts to reduce dependence on oil should be part of a broader energy bill the Senate is expected to consider in the next few months.

“We have to look beyond today’s prices,” she said,” We have to be looking to the future as well.”

First District Democratic Rep. Tom Allen is supporting price-gouging legislation as well as improved fuel-efficiency standards. He said he also has proposed legislation that would provide a short-term tax credit for small businesses that have been hard hit by energy prices. He said he got “an earful” about high energy costs when he was visiting Fort Kent in March.

“The people that are driving for a living, the guys who work hauling logs out of the woods for a living, some told me they spent $1,600 a week for fuel per truck,” he said. “When these prices go up like this, it makes it very difficult for them to work.”

University of Maine economics professor James Breece said there is no doubt that the higher gasoline prices will have an economic impact on Maine and the nation.

“I am really surprised it has not had a significant impact yet,” he said. “People are going to have to cut back sooner or later on another part of their lives; it could be consumer goods or food.”

All four members of the delegation are supporting legislation that would regulate the oil futures market the same way as other commodities in an effort to prevent speculation from driving up prices at the pump.

“Many traders are avoiding oversight by the Commodity Futures Trading Commission by over the counter or through international exchanges or by trading electronically,” Snowe said. “They could, single-handedly, contribute to raising oil prices per barrel $20 to $25.”

Both the House and Senate have proposed legislation that would close what Snowe describes as a loophole in current laws. The large majority of energy trades occur on two markets, the New York Mercantile Exchange which is regulated by CFTC and electronic exchanges such as the InterContinental Exchange, which are not. Most trading is on ICE.

“If you make a trade on the New York Mercantile Exchange, a record is kept, an audit trail is there,” Snowe said. “But if you make a trade on an electronic trading platform, no records are kept, and there is no audit trail.”

Commodity, or futures trading, is very different from most investments. When a person trades in futures, they do not actually buy or own anything. They are speculating on the future direction the price a particular commodity will take and can lose big as well as profit greatly.

But while the delegation supports the regulatory effort, economists are not sure whether that will address the problem of fluctuating oil prices that are reflected at the gas pump.

Delegation members expect both the House and Senate will deal with energy legislation with a higher priority when they return to Washington after the Memorial Day recess.

“People are hurting and they need help,” Allen said. “I think Congress will respond after the recess to what they hear in their home districts.”