Gas prices again fueling energy policy debate

As average gasoline prices approach the $4-mark nationally, lawmakers, interest groups and the Obama administration are debating ways to ease upward pressure on prices for consumers through energy policy.

Gasoline prices have steady risen since the New Year, and in some areas, they are quickly approaching the $4-mark again. Nationally, the average prices of gasoline has risen nearly 20 cents, settling at $3.57 as of today. Analysts have predicted the average price could hit the $4-mark by Memorial Day.

The national debate, however, isn’t centered on what’s causing the rise for consumers so much as it is on possible solutions to slow the price increase.

Republicans and industry groups are fighting regulations and touting more oil-and-gas production that could increase supply and drop crude-oil prices, which many analysts and experts have fingered for the rising gas prices. Environmental and liberal advocates say more renewable energy and fuel-efficiency standards could cut oil dependence and also reduce the burden on consumers. Some Democrats, meanwhile, suggest tapping the Strategic Petroleum Reserve.

Refiners right now have to pay $3 — roughly 84 percent of the current gallon of gas price — just to cover the cost of crude on global markets and gasoline taxes, said John Felmy, chief economist with the American Petroleum Institute, the main oil lobbying group.

While more refinery output could cause a drop in the price in the short term, the long-term solution is to boost U.S. oil production, Felmy said.

“More U.S. barrels on crude markets would help drive down crude costs,” Felmy said.

The industry group has criticized the Obama administration’s energy policies that the API claims limits companies’ ability to lease and drill in offshore areas and on federal lands.

Felmy reaffirmed the group’s position on those issues and also restated API’s support of the Keystone XL pipeline, which could bring 700,000 barrels of crude a day from  Canada to the U.S.

“The administration has not stepped up to the plate on any of this,” Felmy said.

Last week, the House passed a bill aimed at approving the 1,700-mile pipeline, expanding oil and gas production in new offshore areas and opening a small portion of the Arctic National Wildlife Refuge to drilling.

Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, has called the bill “an action plan” to cut gasoline prices in the face of what he views as counterproductive Obama administration policies.

Democrats have panned that bill as an environmentally destructive measure that likely wouldn’t have any near-term impact on gasoline prices.

“If we are serious about weening our dependence on foreign oil, we need to continue the clean-energy policies of the Obama administration and efforts in recent years by Congress,” said Rep. Debbie Wasserman Schultz, D-Fla., the Democratic Party chairwoman.

President Barack Obama said he wants his administration to approve 10,000 megawatts of renewable energy on federal lands by the end of 2012.

Environmental advocates and other opponents of Keystone XL, such as the Center for American Progress, a progressive advocacy group, note that a government analysis found Keystone XL wouldn’t influence projected future U.S. imports of crude from Canada.

The group said major U.S. oil companies are enjoying record profits all while U.S. oil output has risen under the Obama administration, a challenge to the industry’s claims that the president has impeded domestic oil and gas production. The group has chided the GOP and industry opposition to Obama’s proposal to roll back $40 billion worth of tax breaks for oil and gas companies over 10 years.

“As with most other overheated conservative attacks on the president, the facts don’t line up in their favor,” the group said in a blog.

White House spokesman Jay Carney yesterday defended the Obama administration in the president’s pursuit of an “all of the above” energy strategy. Carney said rising oil prices, which in turn force up gasoline prices, stem from global issues like ongoing tensions in Iran and demand growth in China and India.

Carney noted that future fuel-efficiency standards the administration has advanced, including proposed rules for model years 2017-2025, would save consumers $1.7 trillion at the pump and cut U.S. oil use by 12 billion barrels. Environmental advocates and auto makers have supported the standards.

“There are no magic solutions to rising oil prices and the pain that Americans feel at the pump,” he said, insisting Obama has set forth a “comprehensive energy policy,” involving oil, gas and renewable energy. He said the need for more a comprehensive policy is underscored by the rising gas prices.

A group of top House Democrats wrote to Obama today asking him to consider opening the Strategic Petroleum Reserve, a 696-million-barrel stockpile off the Gulf Coast.

Prices fell in previous instances where presidents released supplies from the reserve, sometimes by double-digit percentages, said the lawmakers, including Rep. Ed Markey, D-Mass., ranking member on the House Natural Resources Committee.

“In the long term we need to develop clean energy alternatives that can reduce our dependence on oil. We also need to carefully review our current practice of allowing oil companies to export dreived [sic] from oil produced on public lands,” the lawmakers wrote. “However, as a short-term step, once again considering the release of oil from the SPR could help prevent oil prices from spiking in the short term and help American consumers and our economy.”

Carney has said the Obama administration, which released some oil from the reserve last year amid ongoing instability in Libya, didn’t have any immediate plans to do so again this year but also wasn’t ruling out the idea.

This story was last updated at 3:11 p.m.

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