- The Washington Times - Sunday, March 23, 2008

ANALYSIS/OPINION:

The bad news is that gasoline prices are at record levels. The worse news is that the pain at the pump will likely increase in the months ahead, thanks in part to our own government.

Until recently, we couldn’t say that pump prices were at a record, because the inflation-adjusted levels reached a few times in 1979-1981 during the Iranian revolution and Iran-Iraq War were a bit higher. No more. The current $3.27 per gallon national average is a clear record.

These prices are even scarier given the time of year. Thanks to a host of unnecessarily costly environmental regulations designed to fight summertime smog, prices will probably rise still more. The springtime switchover from winter to summer grades of fuel begins soon — a logistical burden that usually bumps up prices. Then, until September, refiners have to make the more expensive, cleaner-burning blends. The fact that there are more than a dozen distinct blends and barely adequate refinery capacity to make them doesn’t help either.

And, while all this is going on, gasoline demand picks up as we head into the Memorial Day through Labor Day vacation season. Bottom line: Don’t be surprised if today’s prices are the cheapest until the fall. The only way out would be a big dip in oil prices from the current sky-high levels.

Perhaps the worst news of all is that Washington continues to look for ways to “help.” Thus far, help has come in measures that have backfired and boosted prices, like the mandate that ethanol be added to the gas supply. Ethanol increases the cost of driving — which shouldn’t really come as a surprise. After all, if it were cheaper, the government wouldn’t have to mandate it in the first place. Plus, the diversion of corn from food to fuel use has raised the price of corn as well as many related items, like corn-fed meat and dairy. Ethanol is also heavily subsidized, to the tune of more than $1 per gallon. This year, the law requires 9 billion gallons be used, rising to 36 billion by 2022. So we taxpayers are paying for the privilege of higher fuel and food costs, and these costs are headed higher, along with the mandate.

While Washington has fiddled with its ethanol mandate, there has been little effort to streamline or eliminate the regulatory measures that have exacerbated the seasonal spike. We don’t know what Congress and the president may try to do in response to the latest price increase, but recent history suggests little reason to expect anything useful.

Over the longer term, the feds are no less of an impediment to affordable energy. Oil is above $100 a barrel, compared to an average of $20 per barrel during the 1990s. This is due, at least in part, to political turmoil among many major oil producers. Thus, it makes sense to fully utilize the petroleum resources here in the United States, which could provide at least some relief in the years ahead once the additional oil starts coming online. But a host of restrictions keep significant amounts of domestic crude off-limits, and the price run-ups over the last few years have yet to change that.

Bills have been introduced to repeal these impediments and open promising onshore areas such as Alaska’s Arctic National Wildlife Refuge (ANWR). Other measures would make available some of the 85 percent of our territorial waters that are currently restricted. Now that improvements in drilling technology have greatly reduced the above-ground footprint (as well as the risk of spills), these efforts make sense even without high oil prices. But with them, they represent a no-brainer.

It may be too much to ask of our federal government that it create affordable energy solutions. But is it not too much to ask that it stop being a part of the problem?

Ben Lieberman is a senior policy analyst for energy and environment at the Heritage Foundation.

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