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Officials attempt to reign in gas prices

Consumer outrage growing at the pumps

April 7, 2012
By Joe Hoover Staff Writer , The Inter-Mountain

Six random people at gas stations in Elkins were asked how they felt about today's gas prices. While they each wished to remain anonymous, their answers were strong, resounding and exactly the same, as they each chose to express their displeasure in terms not suitable for printing in a family newspaper.

Considering West Virginia's gas prices are among the highest in the country, their answers were not particularly surprising.

Unfortunately, there seems to be little hope the situation will change unless serious measures are taken. However, two attempts to deal with the issue have recently been made.

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On Thursday, U.S. senators and members of Congress sent a letter to the Commodity Futures Trading Commission (CFTC) urging the agency to enact oil speculation regulations mandated in 2010.

And, on Monday, the federal Environmental Protection Agency (EPA) approved the first applications for the registration and distribution for a 15 percent ethanol blend of gasoline.

While these attempts attack today's towering oil prices from different angles, they are each aimed at mitigating the cost for the consumer. However, their efficacy will only show with time.

Oil speculation is frequently cited as one of the primary controls for gasoline prices. Many argue that unchecked speculation is responsible for sudden price increases and that it exploits the American people.

However, many experts believe that the CFTC, a federal watchdog responsible for regulating speculation, has done nothing to reign in Wall Street.

In a letter to the CFTC, Senators Joe Manchin and Jay Rockefeller, both D-W.Va., as well as Congressman Nick Rahall, D-W.Va., and many other Washington politicians, demanded the commission implement the regulations mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which was supposed to limit oil speculation.

They cited studies that argue that excessive oil speculation significantly increases oil and gasoline prices.

Oil speculators drive up the price of oil by betting on future increases, according to the studies. Manchin said that even Commissioner Bart Chilton, one of the five members of the CFTC, recently said that oil speculation could add $7-14 to every tank of gas that is purchased.

"As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation," the letter states. "This is simply unacceptable and must change."

Rockefeller said he called on the CFTC last spring to take control of Wall Street speculation, but they have yet to take any action.

Manchin said that the only solution to America's energy issues is developing a national energy plan that uses all domestic resources and ends our dependence on foreign oil.

"We should all be able to rally around making gas prices more affordable," said Rockefeller.

One natural resource that might help mitigate rising fuel costs is ethanol. Many believe that ethanol fuel blends will help decrease gasoline prices and increase American fuel independence.

Accordingly, ethanol's presence in the fuel market is increasing, as demonstrated by the EPA's approval of E15, which contains 5 percent more ethanol than the current E10 blend.

The EPA's approval of E15 followed several years of testing by the EPA, the Department of Energy, and other organizations, and it only approves engines in the model year of 2001 or newer for E15.

However, the costs and benefits of ethanol are still widely contentious. It is not clear what effect E15 will have on fuel prices or, some argue, on engines.

American Coalition for Ethanol Senior Vice President Ron Lamberty said, at today's prices, 10 percent ethanol blends are already saving consumers 8 to 10 cents per gallon compared to unleaded gasoline. Nationally that saves almost $30 million dollars a day.

"E15 could offer even greater savings," he said. "Drivers with vehicles new enough to use E15 could be saving 12 to 15 cents a gallon by choosing the E15 blend, potentially cutting gasoline costs by an additional $10 million dollars each day."

However, many experts consider such interpretations of prices superficial, because they fail to account for all ethanol production costs.

For example, studies have shown that more fuel is consumed in the harvesting and processing of corn for ethanol than is yielded in the ethanol product.

Other critics worry that E15's compatibility with engines in the model year 2001 or newer has not been sufficiently proven.

Charles Territo, a spokesman for the Alliance of Automobile Manufactures, said more testing is needed to prove that E15 will not damage vehicles that have been designed to run on a maximum of 10 percent ethanol.

Nonetheless, as the EPA's decision indicates, others are confident that E15 will be safe for the qualified vehicles.

Tom Buis, chief executive of Growth Energy, a company that participated in the E15 testing, said he is confident in the research that has been done.

"You know, some people don't want to do anything - they just want to test, test, test, or study, study, study," Buis said. "You know, this nation has been stalling for 30-some years from becoming energy independent."

 
 

 

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