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Inside the Beltway, politicians can't figure out why gas prices are soaring. So dealing with the problem in an election year becomes politically explosive. As a campaign issue, it ranks right up there with Mom, the flag, and apple pie: soaring gas prices in the heat of summer's vacation season. Small wonder America's cul-de-sac crisis has Washington pols stirring.
Republicans bemoan President Clinton's "failed energy policies" and his fervor for green causes. Democrats blame Republicans for stalling on a bill that would free federal oil reserves. And consumer advocacy groups are pointing fingers at the White House and Congress for protecting the oil industry -- and its deep pockets.
The dustup gives TV networks something to cover during the summer news doldrums. But look more closely, and you'll see something unusual in the mix: restraint. Here's what House Republican Conference Chairman J.C. Watts (R-Okla.) had to say on June 12: The Clinton Administration has "no solution" to the problems at the pump. Huh? This is the same ninja of rhetoric who in 1997 said the Environmental Protection Agency was "poised and ready to take away our kids' asthma inhalers to protect the ozone layer."
The truth is that Republicans and Democrats are befuddled by this energy crisis. They don't know exactly what's pushing gas prices up. Nor do they know how to bring them down. The problem most likely has its roots in a complex web of OPEC indifference, busted pipelines, dry refineries, ethanol additives, and some changes in the way gasoline is refined and distributed.
MOODY AND POWERFUL.
The dynamic makes for a landscape loaded with political land mines in an election year, when suburbanites -- moody swing voters -- could decide control of the House. To be sure, these are the voters who carefully pilot their four-wheel-drive gas-guzzlers through mall parking lots and could end up shelling out $100 for a tank of gas before summer is out.
But SUV-huggers are a capricious lot: They tend to be environmentally minded Baby Boomers who are loath to blame clean-air laws for their predicament at the pumps. So Congress is stuck with few options for action, and all are rife with political complications.
One idea would be to revisit the Clean Air Act, which requires polluted cities to sell cleaner-burning gasoline during the summer. This so-called reformulated gasoline has been identified as one culprit behind high pump prices. But gutting the Clean Air Act is a no-win for Hill Republicans, who fear a rerun of 1996. Back then, under the tutelage of then-Speaker Newt Gingrich, the party clumsily tried to do away with a host of environmental laws and came off looking like stooges for polluters. Besides, the Clean Air Act was enacted in 1990 by one of the party's faithful, President George Bush.
PLAYING DIRTY.
Congress could take a less strident approach and force the EPA to temporarily lift the rule requiring polluted regions, such as Milwaukee and Chicago, to burn the cleaner gas. Indeed, House Speaker J. Dennis Hastert, whose home state of Illinois is among those hardest hit by soaring pump prices, did just that on June 20. Hastert estimated an EPA waiver would save drivers 15 cents on the gallon.
But Hastert is probably bluffing, and here's why: An EPA allowance to use dirtier gas at the retail pumps wouldn't exempt the state of Illinois from meeting its overall federal clean-air targets. That means the cost of cleaner air would be shifted to other polluters, namely business.
Complicating the political calculus on waivers is the oil industry, which so far this election cycle has given more than $10 million to GOP congressional candidates and nearly $4 million to Democrats. Oil refiners and producers oppose waivers on the use of reformulated fuel because the industry is heavily invested in technology to produce the cleaner-burning gasoline.
A NO GO.
Another approach: Give the masses quick relief by repealing the 4.3-cent-per-gallon gas tax, also known as the Gore Tax because the vice-president cast the deciding vote in 1993. But that's a no go, too.
First of all, 4.3 cents barely registers when you're shelling out $2.50 a gallon. Then there's a political problem. In 1998, the GOP, led by House Transportation Committee Chairman Bud Shuster (R-Pa.), passed a law that funnels 100% of gas taxes directly into road improvements.
Even a short-term suspension of the tax could cost the highway trust fund some $20 billion by the end of this year. Ultimately, that means depriving lawmakers of the means to bring home the bacon in the form of new highways. Senate Majority Leader Trent Lott tried repealing the gas tax in April. The Senate, on a 56-43 vote, handed him his hat.
Several lawmakers, led by House Minority Leader Richard Gephardt (D-Mo.) and Democratic Caucus Chairman Martin Frost (D-Tex.) are urging Republican leaders to pass a bill that would allow President Clinton to tap into the Strategic Petroleum Reserve. The reserve is a federal oil bank set aside to aid the nation during a national-security crisis. The Senate is sitting on the bill because GOP lawmakers aren't convinced of the wisdom of compromising national security to placate unhappy SUV owners. The Clinton Administration agrees with them and says it won't use the reserve -- even if it wins authority to do so.
In any event, the EPA on June 20 declared gas supplies "adequate" in the Midwest. So officially, a shortage isn't the problem.
"QUAKING"?
Democrats have to be especially careful with the Al Gore pounding the Presidential stump. Republicans have been busy digging through old newspaper clippings and Gore's "Earth in the Balance" manifesto in search of remarks on how high gas prices help the environment. They plan to use the green-leaning statements to leverage the pump-price debacle to the advantage of Texas Governor George W. Bush. They're waiting to roll out the negative ads when the time is right.
"Al Gore is quaking in his boots," says one GOP aide. But that coin has two sides. Team Gore in recent days has been shooting out Bush boasts about how close the Texan considers himself to be with Big Oil. On June 21, the Gore camp doled out a Bush remark from 1978: "There's no such thing as being too closely aligned to the oil business in West Texas," Bush told the Lubbock Avalanche Journal.
Nevertheless, worried Democrats, including Gore and the White House, are spinning conspiracy theories about price-fixing within the oil industry. If the Clinton Administration has any evidence of price-fixing, it isn't letting on. The Energy Dept. and the EPA have asked the Federal Trade Commission to come up with something to support the price-fixing theory. Meanwhile, the White House is pointing fingers at Republicans in Congress for sitting on a Mar. 17 proposal that would boost domestic production by giving tax credits to oil producers. "The Administration is going through heroic efforts," says a senior Energy official.
The upshot: We could be witnessing a Mexican standoff on the Potomac, where both sides are vulnerable and unable to make a bold move. It's a rare occurrence in Washington, where there's always a feint within a feint within a feint. But if you're looking for action, don't be discouraged. The capital city has plenty of other issues, so you shouldn't have to wait long for some fireworks.
Woellert covers Congress from Business Week's Washington bureau
EDITED BY BETH BELTON
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