Big government rules are driving up our gas prices

Why do prices at the nation’s gasoline pumps remain so high this August?  Is it because of the Iraq conflict? Is it OPEC, the oil cartel? Is it a conspiracy by ‘the big oil companies’?

A big factor is something largely under-reported: Much of the problem involves excessive government control that is, in May and June, the domestic petroleum industry had to comply with new emissions standards that make gasoline production more expensive and onerous.

Did you know that special blends of gasolines have to be sold in the summer months in polluted metropolitan areas to help reduce ozone-forming emissions? The regulations, some of which kicked in under phased-in federal Clean Air Act provisions, require specific fuel content levels for oxygen and benzene, as well as establishing performance standards for nitrogen oxides and other toxic emissions. Terminals are mandated to sell these reformulated gasolines beginning May 1. Retailers must sell these special blends starting June 1.

These stringent new rules are naturally straining a national refining system that has not seen a major oil refinery built since 1976. Since 1980, the number of U.S. refineries has declined from 320, with a capacity to refine 18.6 billion barrels of crude oil every day, to only 150 facilities with a capacity of 16.5 million barrels a day.

Many Americans will remember ‘the good old days’ when there were just two grades of gas ‘regular and premium. Since last year ‘because of the strict new environmental regulations ‘ there are over 20 gasolines made for, and sold within, specific markets. One mess this creates is that a formulation sold in one market may not be sold in a neighboring market because of different, conflicting regulations. So the pipelines, barges, railroad cars and trucks that all used to carry two types of gas now must move ‘ and keep segregated ‘ all sorts of different gasolines. The trendy term for them: ‘boutique fuels.’

The National Association of Convenience Stores is one of many voices – ranging from business associations to consumer groups ‘that have had enough of Big Government and its complex boutique fuel rules. This organization represents the retail locations where many Americans buy their gasoline. It underscores that ‘refineries must now produce a variety of ‘boutique’ fuel formulations ‘ often on a seasonal basis ‘ that are more difficult and expensive to make, adding more pressure to their operations. These pressures increase operating costs and the potential for a refinery breakdown, fire, or other unplanned interruption.’ And when a refinery goes off-line unexpectedly, and some have because of this stress, those barrels of fuels can’t be replaced right away.

Recently a bipartisan group in Congress, led by Rep. Roy Blount, R-Mo., tried to cap and reduce the proliferation of boutique fuels through common-sense legislation. “The Gasoline Price Reduction Act of 2004” (H.R. 4545) also would have allowed the Secretary of Energy, if there was a fuel supply disruption in some particular area, to waive the onerous gasoline regulations until it was deemed that the fuel supply disruption had been corrected.

Sad to say, the forces of big government overcame the forces of common sense, and the measure failed to pass the House of Representatives. But, just like a lot of reform legislation that initially fails, sponsors vow to educate more of their congressional colleagues and the public at large. So maybe reason and reform in this public policy area “and resulting gasoline price relief” can occur at least before next summer.

Phil Kent is an Atlanta media consultant and author of “The Dark Side of Liberalism” (Harbor House).