- The Washington Times - Wednesday, September 7, 2005

Congress should consider raising fuel-economy standards for all vehicles for the first time in 30 years in light of the gasoline shortages and huge spike in pump prices caused by Hurricane Katrina, key senators said yesterday.

“I believe we must take another look at the CAFE standards,” said Sen. Pete V. Domenici, New Mexico Republican and chairman of the Senate Energy and Natural Resources Committee, referring to the Corporate Average Fuel Economy rules enacted in the mid-1970s but not updated since.

“We looked at that before, and it was not politically possible. I’m not sure that will be the case after Katrina,” he said.

His comments came as the government reported that gas prices last week breached the $3 level for the first time on average nationwide, with the biggest increases seen in Mid-Atlantic states such as Virginia and Maryland, and in the District, where the average price for regular was $3.29 a gallon.

Republicans and Democrats both said they suspected price gouging as gasoline costs soared in the aftermath of Katrina, but they complained that the government doesn’t have the ability to prevent such market abuses.

“The American people are being victimized more than any free market would warrant,” said Sen. Gordon H. Smith, Oregon Republican.

Mr. Smith and other senators at a committee hearing yesterday said regulators, including the Federal Trade Commission, are not aggressively pursuing price gouging and other market manipulation by energy companies reaping huge profits.

“There are growing concerns that oil companies are making too much in profits at the expense of consumers,” Mr. Domenici said.

Some relief at the pump is on the way as the prices of crude oil and wholesale gasoline dropped for a second day in New York trading, and are close to levels that prevailed before the hurricane struck the Gulf Coast, the heart of the nation’s oil-producing sector.

Witnesses at yesterday’s hearing said pump prices will remain high for weeks and possibly months, however, because the hurricane knocked out about 10 percent of production at oil wells and 5 percent of production at refineries that could take up to a half-year to restore.

Mr. Domenici acknowledged that the energy law his committee drafted and enacted this summer did not go far enough to prevent crises such as the current one, although the Bush administration last week did use the new powers it received to temporarily lift environmental requirements for fuels during emergencies.

“We left some issues out” in the interest of getting the much-debated legislation passed, Mr. Domenici said. “Things that were not politically possible two months ago are now before us.”

Sen. Jeff Bingaman, New Mexico Democrat and the committee’s ranking member, said he also hopes Congress will revisit whether to require cars, trucks and sport utility vehicles to give better mileage than the current standard, which is 27.5 miles per gallon on average for cars.

Witnesses at the hearing agreed that the sharp spike in fuel prices in the past week shows that Congress needs to rethink policies that have led to an overwhelming dependence on heavy, inefficient cars and trucks at a time of tight supplies and turmoil in world oil markets.

“As Hurricane Katrina has reminded us, we are never more than a disaster away from this type of crisis,” said Robert L. Darbelnet, president of AAA, a driver advocacy group.

“If we do not reduce our dependency on fossil fuel or increase our access to a reliable source of it, the narrow margin we rely on for stability will continue to erode.”

Mr. Darbelnet said the improved fuel-efficiency standards for SUVs and light trucks proposed last month by the administration do not go far enough, particularly because they do not “address the largest and heaviest passenger vehicles on the road today.”

The Environmental Protection Agency also needs to revise the fuel-efficiency tests that result in estimated miles per gallon for each vehicle on the road, he said. It has been substantially overstating mileage potential by assuming that, among other things, drivers do not use their air conditioners or drive faster than 55 miles per hour.

Since the hurricane struck more than a week ago, the shutdown of nearly all the oil and gas facilities in the Gulf of Mexico has been partially reversed, witnesses said, and the three major pipelines feeding gasoline to the Northeast, Mid-Atlantic and Midwest have been mostly restored to operation.

The availability of fuel to feed into the pipelines will remain a problem, however, as four heavily damaged oil platforms producing about 10 percent of the Gulf oil will take three to six months to repair, said Rebecca Watson, assistant interior secretary for land and minerals management.

Ms. Watson said her office and the oil companies it supervises are working hard to get facilities back in operation, but continue to be hampered by flooding, a lack of power and the loss of workers. Her agency’s office in New Orleans had to be closed, for example, and 67 employees remain missing.

Although half of the 1.8 million barrels a day of lost refining capacity should be restored by the end of the week, that still would leave gasoline output about 5 percent lower at a time when fuel is in short supply worldwide, said Guy Caruso, head of the Energy Information Administration.

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