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Gas Prices Move to Center Stage

Having already made a down payment toward the bill for emergency aid in the wake of Hurricane Katrina, Congressional Republicans return to work this week eager to defuse the explosive issue of soaring gas prices.

The skyrocketing cost of fuel was already causing political consternation before the damage wrought by Katrina sent prices even higher and prompted suspicions among some critics that oil companies might be exploiting the tragedy for profit.

“We will ensure … that any rising gas prices in the wake of Katrina are not the result of price gouging,” House Majority Leader Tom DeLay (R-Texas) said Friday.

Today, the Senate Energy and Natural Resources Committee will hold the first of what is expected to be several hearings convened by multiple committees examining the issue from rising gas prices to refinery production.

“This hearing will examine the need to diversify our capacity so that we are better able to both refine and produce oil in the United States,” said Sen. Pete Domenici (R-N.M.), chairman of the energy panel. “It may lead to discussions about alternate sources of supply, and the need to ensure that our capacity is spread out over a larger geographic area so that a catastrophic event such as this one will not have such a negative impact.”

Energy lobbyists on Friday were saying they expected the Senate Environment and Public Works Committee to also convene hearings on the matter, an action Sen. James Inhofe (R-Okla.) hinted at earlier in the week.

“Rest assured that once we can assess the impacts, what worked and what went wrong, the Environment and Public Works Committee will look at ways to provide relief and improve infrastructure to help prevent some of the challenges the Gulf Coast has endured over the last several days,” Inhofe said.

On the House side, Energy and Commerce Chairman Joe Barton (R) said last week that his panel would hold a hearing this Wednesday “on the consequences of Hurricane Katrina and the general impact on the energy market both at wholesale and at retail.”

Barton also promised to examine whether oil companies are exploiting the catastrophe.

“I think a very good case can be made that some retailers have taken advantage of that and have begun to gouge the American people,” he said.

Barton added that he would look at “appropriate legislative and also enforcement actions” to prevent “prices from just going through the roof in an excessive, price-gouging frenzy” though he did say “there is not a need for for price controls and price freezes at any level.”

As they geared up to tackle the oil price issue last week, Republicans emphasized that they were simply responding to the needs raised by Katrina rather that reacting to bad poll numbers.

“The need to approach it is much more policy-oriented than it’s politically motivated,” insisted a GOP leadership aide.

But while Congress may be addressing a real policy imperative, lawmakers and aides also understand the high political stakes associated with forcing voters to pay more at the pump.

Even before Katrina struck, Members were reporting back to the leadership during August recess that their constituents were extremely concerned about rising gas prices.

“Unequivocally, this was the No. 1 issue,” said a House Republican leadership aide.

In fact, recent polls have shown that not only are voters upset about rising prices but that they hold Congress and the Bush administration responsible for the problem.

A CNN/USA Today/Gallup poll taken Aug. 28-30 found that 57 percent of respondents blamed Congressional Republicans a “moderate” amount or a “great deal” for spiraling prices.

Fully 84 percent of respondents thought oil companies were to blame, making it that much more important for GOP lawmakers to avoid the appearance that they are doing the companies’ bidding and overlooking improprieties.

Democrats, meanwhile, are already considering legislative solutions to curtailing oil companies’ profits.

During the recess, Sen. Byron Dorgan (D-N.D.) declared he would offer a “windfall profits tax” bill to reduce big oil companies’ earnings, which he charged come at the expense of U.S. consumers. Dorgan first proposed the idea Aug. 18, 11 days before Katrina struck the Gulf states. Dorgan estimated oil companies are “reaping an extra $7 billion in profits each month because of skyrocketing oil prices” and said the proposed tax would be converted into consumer rebates.

Democrats also used the opportunity to criticize Bush’s handling of the nation’s energy situation.

“People are getting gouged at the gas pump,” said Rebecca Kirszner, spokeswoman for Senate Minority Leader Harry Reid (D-Nev.). “There is no leadership from the White House on this issue. We are very concerned.”

Kirszner said that Reid is carefully studying Dorgan’s proposal as well as others that might help resolve the “energy crisis.”

“Sen. Dorgan identified an important problem and we all agree this needs to be dealt with,” Kirszner said. “Democrats are united in our belief that consumers must get real relief. The White House has done nothing to solve the problem.”

And Democrats are likely to continue making their long-standing case that the Bush administration and Hill Republicans are too close to the oil companies to effectively crack down on them.

But Republicans have their counterargument ready.

“The problem that the Democrats have … is that their policies have prevented us from building refineries and finding more domestic sources of oil,” said a GOP leadership aide.

Republicans will amplify that argument in the coming weeks. The House Resources Committee will likely use the upcoming budget reconciliation process to push new incentives to increase energy production. Those measures will include the final steps toward opening the Arctic National Wildlife Refuge to oil exploration.

Katrina “certainly demonstrates the need for increased domestic supply,” said Resources spokesman Brian Kennedy.

Energy companies could also benefit from new tax breaks if Congress decides to pass a stimulus package to lessen the economic effects of Katrina. House Majority Whip Roy Blunt (R-Mo.) said the House would likely consider such a measure in the coming weeks.

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