RL33521 - Gasoline Prices: Causes of Volatility and Congressional Response
13-Nov-2008; Carl E. Behrens and Carol Glover; 17 p.
Update: Previous Releases:
September 25, 2009
February 4, 2008
August 16, 2007
July 27, 2007
May 29, 2007
February 6, 2007
September 25, 2006
MOST RECENT DEVELOPMENTS:
Gasoline prices surged toward $3.00 per gallon in April 2006 and stayed there during the rest of the spring and early summer. The approach of the summer driving season, and complications involving replacing the gasoline additive MTBE with ethanol, were cited by some observers as behind the latest run-up.
The price move stimulated a large number of new legislative initiatives and renewed interest in several that had been under consideration for some time. On June 29, the House passed H.R. 4761, the Domestic Energy Production through Offshore Exploration and Equitable Treatment of State Holdings Act of 2006.
Abstract: The high price of gasoline was an important consideration during the debate on the Energy Policy Act of 2005 (EPACT 2005), P.L. 109-58. As prices continued to surge, the continuing crisis renewed attention on some issues that were dropped or compromised in the debate over P.L. 109-58, as well as to a number of initiatives to reduce the impact of high prices on consumers. However, the 109th Congress adjourned after passing only one of them: a measure lifting some restrictions on oil and gas leasing in the Gulf of Mexico.
Continued high gasoline prices, and the change in leadership in the 110th Congress, put the energy issue in the forefront, and the House passed H.R. 6, the Creating Long-Term Energy Alternatives for the Nation (CLEAN Energy) Act of 2007, as part of its “100 hours” program at the beginning of the first session. President Bush, in his State of the Union speech on January 23, proposed cutting gasoline consumption by 20% in 10 years through increased fuel economy standards and use of alternative fuels. He also proposed expanding the Strategic Petroleum Reserve (SPR) to 1.5 billion barrels.
On May 23, the House passed a bill (H.R. 1252) banning and punishing the sale of gasoline at “unconscionably excessive” prices when the president declares an “energy emergency.”
The Senate on June 21 passed its version of H.R. 6, including price-gouging provisions similar to those in H.R. 1252 and an increase in Corporate Average Fuel Economy (CAFE) standards.
On August 4 the House passed H.R. 3221, the New Direction for Energy Independence, National Security, and Consumer Protection Act. Included in the bill as passed was H.R. 2776, the Renewable Energy and Energy Conservation Tax Act, which would repeal some of the tax benefits to domestic oil and gas producers included in EPACT 2005 and increase tax benefits for renewable energy and conservation.
A large number of factors have combined to put pressure on gasoline prices, including increased world demand for crude oil and limited U.S. refinery capacity to supply gasoline to a growing national economy. The war and continued violence in Iraq have added uncertainty, and threats of supply disruption have added pressure, particularly to the commodity futures markets.
The gasoline price surge has stimulated much legislative activity, but without the urgency of previous energy crises. In part, this may be due to the fact that there has been no physical shortage of gasoline or lines at the pump. In addition, the expectation of former crises — that prices were destined to grow ever higher — has not been prevalent.