U.S. Senate Hearing on Gasoline Prices Unlikely to Result in Real Relief for Consumers

Media Contacts

Statement of Diane E. Brown, Executive Director

Arizona PIRG

With oil prices reaching record levels, consumers are beginning to do their part to reduce oil consumption. Drivers can fill up less frequently by using transit or carpooling, driving more carefully, and keeping tires properly inflated and doing proper car maintenance.

So far, however, the Bush Administration and Congress have failed to do their part to protect American consumers from skyrocketing gasoline prices. As a nation, we are facing enormous energy problems that require real leadership and common sense solutions. Today’s hearing is unlikely to result in real relief for consumers since it is dominated by Big Oil and its Administration allies with no representation by public interest consumer organizations. Arizona PIRG calls on Congress and the Bush Administration to do several things to provide relief for consumers.

They should recognize that we cannot drill our way out of this problem and must dramatically reduce our consumption of oil. The U.S. has only 3% of the world’s proven oil reserves and consumes 25% of the world’s daily production. It is time for Congress to start protecting consumers from oil price shocks by requiring cars and trucks to go further on a gallon of gasoline.

The auto industry should do its part to help solve this problem. According to the National Academy of Sciences, we can harness America’s technological know- how to require light trucks and autos to meet a 40 miles per gallon average standard over ten years. When fully phased in, this would reduce oil consumed by cars and trucks by one third. Even in the first several years, consumers would start saving at the pump. For example, Arizona PIRG’s report “America Idles” documented that American consumers could have saved $5 billion at the gas pump in 2005 if President Bush had raised fuel economy standards at the beginning of his first term.

Until these standards are fully phased in, Congress should fund incentives for consumers to trade in gas guzzlers for more efficient vehicles. Hundreds of thousands of consumers could benefit if these incentives were funded by repealing existing oil industry tax breaks or instating a windfall profits tax on the oil industry.

Finally, Congress and the Bush Administration should also investigate oil industry profits and prices and strengthen laws that protect consumers from price-gouging. While the supply crunch caused by Katrina may be the biggest short term driver of higher gasoline prices, there is little question who stands to benefit: Big Oil. Whether it’s a massive hurricane destroying Gulf Coast oil infrastructure or wars and political unrest in the Middle East, American consumers are increasingly vulnerable to supply disruptions. Oil companies take advantage of these situations by dramatically raising prices at the pump, and have reaped record profits in the past year as a result.

American consumers are starting to do their part to deal with record-breaking prices at the pump, it is time for our leaders in Washington to require Big Oil and the Big Three automakers to step up and do their part.