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Summary:
The high price of gasoline has been and continues to be a driving factor in consideration of energy policy proposals. Despite passage of the massive Energy Policy Act of 2005 (EPACT 2005, P.L. 109-58), and the Energy Independence and Security Act of 2007 (H.R. 6, P.L. 110-140), numerous other proposed initiatives remain under active consideration in the 110th Congress. Measures proposed include repeal of some tax benefits to domestic oil and gas producers contained in EPACT2005, provisions on price gouging, and reform of oil and gas leasing in the Gulf of Mexico. A large number of factors have combined to put pressure on gasoline prices, including increased world demand for crude oil and limited U.S. refinery capacity to supply gasoline. The war and continued violence in Iraq added uncertainty, and threats of supply disruption have added pressure, particularly to the commodity futures markets. Concern that speculation has added volatility and upward pressure has frequently been cited. In recent months, a decline in the value of the dollar compared to other currencies has increased the dollar price of oil on futures markets. The gasoline price surge has stimulated much legislative activity, but until recently there has not been the sense of the extreme urgency of previous energy crises. In part, this may be due to the fact that there has been no physical shortage of gasoline or lines at the pump, as there were after the Arab oil embargo in 1973 and the Iranian revolution in 1979. At that time there was expectation that prices were destined to grow ever higher, and many believed that the world's supply of oil was running out. Such views have been less prevalent during the current run-up. But the continued and unrelenting increase in crude oil prices to record levels, even discounting inflation, is leading many to suggest that changing world market conditions may have led to permanent, or at least chronic, shortages of petroleum production capacity. Others continue to expect that growth in demand will moderate, and production will increase to meet demand, as it did following the shortages of the 1970s. The continuing high prices have led to a further search for legislative remedies. This report, after analyzing factors that have contributed to high gasoline prices, describes the major legislative initiatives and discusses the issues involved.
