News
Washington Insider
Although the fuel tax cutting proposal could come up again, it faces stiff opposition

Fuel crisis relieffrom Congress?

There have been many bills introduced in Congress to address the fuel crisis, but few are going anywhere. The legislation that has received the most attention focuses on reducing federal fuel taxes. Other bills focused on investigating the practices of the Organization of Petroleum Exporting Countries, examining the use and/or expansion of our strategic oil reserves, and providing relief to those who rely on home heating oil. Legislation to specifically help truckers, however, is still being considered.

Repeal of the federal excise tax on fuel

At least a dozen bills have been introduced to reduce or eliminate the federal excise tax on fuel. Senator Ben Nighthorse Campbell (R-CO), the only senator with a current CDL, was the first to respond to the fuel crisis with legislation calling for fuel tax relief. Sen. Campbell's bill would repeal the entire 24.3-cent fuel tax for one year, or until the price of fuel goes down to its Dec. 29, 1999 level, whichever comes first. Sen. Campbell's bill has 14 co-sponsors from both political parties.

The tax repeal proposal that has received the most attention, however, is by Senate Majority Leader Trent Lott (R-MI), who has proposed a "federal fuel tax holiday." This bill would repeal 4.3 cents of the fuel tax until the end of the year, and would repeal the entire 24.3-cent fuel tax if the price of gasoline exceeds two dollars per gallon. During the first and second weeks of April, Sen. Lott attempted to bring his bill to the floor of the Senate for debate and consideration, but a couple of losses on preliminary procedural votes seemed to predict defeat for the legislation had it been voted on at the time. Avoiding near certain defeat, Sen. Lott pulled the bill off the floor of the Senate. He stated that he might bring the bill back at a time when it may have a better chance at passage - perhaps during the peak summer driving season when fuel prices may be even higher.

However, tax repeal proposals have faced several questions. Some critics believe that a decrease in fuel taxes may not be that helpful to consumers because they are really paid to the government by oil companies and not directly by consumers. There is no guarantee that oil companies would pass on the tax savings to the consumer. Second, there is concern that the tax repeal would have an enormous effect on the federal budget with limited benefits to the consumer. The price of fuel has gone up in the neighborhood of 50 cents in the last few months. A decrease in the fuel tax of 4.3 cents, or even the full 24.3 cents (should some of it be passed along to the consumer) would not come close to bringing fuel down to its previous price.

Proponents of repealing fuel taxes have been those lawmakers (primarily Republicans) who promote tax-cutting policies. They argue that this tax reduction would reduce the cost of fuel for consumers. At first, some Republicans were pushing for a repeal of 4.3 cents as an issue allowing them to define themselves separately from the Democrats in this election year. This was the amount of the fuel tax that President Clinton had increased federal fuel taxes several years ago.

This strategy did not have its intended result, however, as Republicans, lead by Rep. Bud Shuster (R-PA), came out strongly against the fuel tax repeal. Rep. Shuster lead the fight during the late 1990s to ensure that funds collected by fuel taxes are dedicated to the highway trust fund. Reducing these taxes would lower the amount of available funds for road construction and repair. Addressing the country's need for road construction and repair are a high priority for many lawmakers. They do not want to see it compromised by a fuel tax repeal.

Although there is still a possibility that the fuel tax cutting proposal could come up again, it faces stiff opposition by members of both political parties.

Tapping U.S. Oil Reserves

More than nine pieces of legislation have been introduced that focus on the use of U.S. oil reserves to address the fuel crisis. The purpose of drawing upon the oil reserves would be to increase the supply of oil in the marketplace, thereby causing prices to go down. Home heating oil is very similar to diesel fuel, and this proposal is intended to provide relief to consumers of both. The inadequate supply of home heating oil in New England this winter is blamed for the dramatic rise in diesel prices to more than $2.00 a gallon in that region.

Rep. Ron Klink (D-PA) introduced a congressional resolution that would encourage the President to draw down the strategic oil reserve if OPEC did not act to increase the supply of oil and encourage an increase in the amount of oil in the reserve. Another proposal introduced by Rep. Bernie Sanders (I-VT) would create a fuel reserve in New England that could be tapped during periods of oil shortages.

In two related bills introduced by Rep. James McGovern (D-MA) and Sen. by John Kerry (D-MA), the Secretary of Energy would be required to send Congress a report on "home heating readiness." It would compare the predicted need for heating oil during the upcoming winter and the readiness of the oil industry to meet those needs.

Responding to OPEC actions:

Several bills have been introduced to admonish OPEC for fixing the world oil market and creating a shortage for the purpose of raising the price per barrel of oil. Two of these bills passed one house of Congress. In the Senate, a resolution introduced by Sen. John Ashcroft (R-MO) asks Congress and the administration to work toward a better energy policy, and to reduce our dependence on foreign oil. It also asks the administration to request OPEC's help to stabilize oil prices and to increase the supply of oil. In the House, a bill sponsored by Rep. Ben Gilman (R-NY), chairman of the House Foreign Relations Committee, had a very similar purpose. The bill requests that the President investigate the extent to which oil producing countries were fixing prices and report on that investigation to Congress.

In a related bill, Sen. Charles Grassley (R-IA) introduced legislation that would terminate all foreign assistance to countries that engage in oil price fixing.

Taking a different approach to the international community, Rep. Peter DeFazio (D-OR) introduced a bill requiring the President to file a complaint with the World Trade Organization (WTO) against oil producing countries. The complaint would be for violating trade rules that prohibit "quantitative limitations on the imports or exports of resources or products across borders."

The WTO is the international organization that forges trade agreements with the goal of preventing countries from establishing import/export rules that create unfair restraints on trade in the international marketplace.

Miscellaneous Legislation

Two bills have been introduced that focus on promoting the use of domestically produced oil. In recent years, the price of oil dropped so low that domestic oil producers, many of them small businessmen, could not get a price per barrel to sustain their business. Sen. Kay Bailey Hutchison (R-TX) introduced legislation to allow domestic oil producers tax credits for oil drilling operations.

Other legislation would address the situation today whereby all oil drilled in Alaska is exported to Asian countries. Another bill introduced by Rep. DeFazio would suspend export of that oil until the President determines the oil shortage/price spike to be over. In related legislation, introduced last year before the fuel crisis, Alaskan Rep. Don Young (R) proposed legislation to open up the arctic plain to further oil exploration and drilling.

Last but not least, Rep. Jim Traficant (D-OH) has introduced a bill that would "impose a civil penalty on any energy producing company that implements an unreasonable price increase for crude oil, residual fuel, or refined petroleum products."

July Digital Edition