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For Immediate Release:
November 10, 2005

Energy: Burning Questions

by Senator Larry Craig

A few days ago, I read an article in the newspaper stating that the average price of gasoline nationwide has dropped 68 cents per gallon since September 5th. That's great news, right? Under normal circumstances, it would be. But there is nothing normal about paying $2.38 or more for a gallon of gasoline. In much of Idaho, the price is closer to $2.50.

In the past few weeks, I've held a number of townhall meetings in Idaho, to make sure people have a chance to let me know what's on their minds. Since the spike in gas prices that followed Katrina, Idahoans have let me know that a major concern on their minds, if not the top concern, is energy prices. Why is a gallon of gasoline or diesel so expensive? And why are prices in Idaho so high, when compared to other states?

When the CEOs of five major oil companies and the attorneys general from several states came to testify before a joint hearing on Capitol Hill regarding gas prices, I made sure to ask them these questions. Idaho consumers deserve some honest answers.

The good news is that the attorneys general told us they have investigated price gouging thoroughly, and it is not occurring as widely as it has been portrayed. Idaho Attorney General Lawrence Wasden is also conducting a thorough investigation on behalf of Idaho consumers. The bad news is that gas pricing is so hard to understand and even harder to explain, that five CEOs could not explain clearly and simply why gas in Idaho is more expensive than in Washington, D.C.

Is Congress going to do anything about it? The short answer is - we already have. In July, Congress approved a much-needed energy bill, which will get the United States back in the business of producing energy. Geologists have found large deposits of natural gas throughout much of the intermountain West, but these deposits often lie beneath BLM or Forest Service lands, and are subject to restrictive federal regulations which often make them too cumbersome or expensive to develop.

The energy bill will streamline the processes for permitting and drilling for oil and natural gas on public lands. Eventually, development of these deposits will increase the supply of oil and natural gas, and help to moderate prices. It also encourages development of alternative sources of energy like ethanol, geothermal, wind, nuclear and hydrogen, which minimize impact on the environment. This will have the added benefit of lessening U.S. dependence on foreign sources of energy.

Also included in the energy bill was a provision that directed the Federal Trade Commission to investigate the current high gas prices and whether price gouging was taking place. The FTC has asked companies that operate pipelines, refineries and terminals for information and may also ask company officials to testify in the investigation. However, FTC Chairwoman Deborah Majoras said a federal law against price gouging may not solve the problem: "Price gouging laws that have the effect of controlling prices likely do more harm than good. While no consumer likes price increases, in fact, price increases lower demand and help make the shortage shorter-lived than it otherwise would have been." While this may not satisfy some consumers, her point is one that Congress must honestly consider.

It has become very clear just how important energy is to this nation and our economy. Energy prices effect the price of everything, not just a gallon of gas. High prices ripple outward from electricity and transportation costs, to influence the price of just about anything that needs to be delivered from farm or factory to market.

As a member of the Senate Committee on Energy and Natural Resources, I was proud to have a role in crafting the energy bill, which I believe will be a great help to consumers. I only wish Congress could have gotten its act together and passed it five or ten years ago. That being said, I will continue to look for ways to encourage a stable, abundant supply of energy to keep our economy strong and protect the wallets of Idaho workers and families.

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