Energy Bill Won't Bring Gas Price Breaks for '08

Monisha Bansal | Staff Writer | Tuesday, January 15, 2008

Energy Bill Won't Bring Gas Price Breaks for '08

( - Despite claims that the newly passed energy bill will reduce the amount that consumers pay at the pump, recent government projections show the cost of energy rising over the next year in the United States.

The president signed the energy bill in late December. The week before the bill was signed into law, the Energy Information Administration at the Department of Energy estimated that the cost of gasoline would average well over $3 per gallon in 2008, with gasoline prices peaking at over $3.40 per gallon this spring.

However, new estimates by the Energy Information Administration that include the impact of the legislation projects an increased cost of about $0.10 per gallon of gasoline, while consumption will stay roughly the same.

But House Speaker Nancy Pelosi (D-Calif.) said in a statement that "this legislation will benefit our consumers, with savings at the pump, it will strengthen our national security, and it will preserve God's beautiful creation for our future generations."

Pelosi pointed to stricter emissions standards for automobiles as well as a mandate for increased bio-fuels.

"In order to reduce the price at the pump, our legislation increased fuel-efficiency standards to 35 miles per gallon by 2020," she said. "This legislation is historic - it is the first time in 32 years that Congress has raised these standards, known as CAFE," or Corporate Average Fuel Economy.

"CAFE standards will save the average driver $700 to $1,000 each year," Pelosi added. "That adds up to $22 billion in net annual consumer savings in 2020."

But Peyton Knight, director of environmental and regulatory affairs at the conservative National Center for Public Policy Research, said, "Far from bringing relief to Americans' pocketbooks, the recently passed energy bill is actually designed to bring more pain.

"The increase in CAFE standards will not only force automobile manufacturers to produce more expensive vehicles but also vehicles that are lighter and less crash- worthy," he told Cybercast News Service.

Ben Lieberman, a senior policy analyst at the conservative Heritage Foundation, however, said that while the CAFE provisions will raise costs, the immediate concern is the ethanol mandate.

Lieberman told Cybercast News Service that the main reason for increased gas prices is a rise in the price of oil, "but mixing in renewable fuels makes a bad situation even worse."

"It will raise costs," Lieberman said. "If ethanol and other renewable fuels were cost-competitive, they would not need to be mandated. The fact that oil was over $90 a barrel and yet the ethanol industry still felt it needed an expanded mandate to compete indicates how costly ethanol is."

"The enormous increase in the ethanol mandate will not only make gasoline more expensive, but as more corn is diverted from food to fuel use, Americans can expect to pay more at the grocery store as well," noted Knight.

"Despite the fact that the demand for viable energy sources such as oil, gas and coal is expected to rise," he said, "the bill does nothing to help increase domestic supply of these proven resources."

But Carol Browner, former administrator of the Environmental Protection Agency and a member of the board of directors at the liberal Center for American Progress, said the savings will come in the future.

"This historic energy legislation will eventually reduce American oil consumption by 2.8 million barrels per day," she said in a statement. "The new fuel economy standards alone will save drivers $22 billion in fuel costs and will cut oil use by 1.1 million barrels daily in 2020 - about the same amount that we import each day from Nigeria.

"According to the Union of Concerned Scientists, the improved fuel economy standard will reduce our greenhouse gas emissions by 190 million tons each year, an achievement equivalent to the removal of 28 million cars from the road," Browner added.

"The bio-fuels standard will reduce oil use by an additional 1.7 million barrels per day in 2022, making the bill an even more significant win for the environment and the American public," she added.

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