GWEN IFILL: Gasoline prices are climbing at a record-setting pace, up 12 cents in just the past two weeks. And consumers around the country who may have been unaffected by heating oil price hikes this winter are now feeling the pinch.
MAN: It just happened so suddenly that it came to me with surprise.
MAN ON STREET: Gasoline prices are one of those hot-button items. When it starts going up, people get worried way out of proportion of how much more they have to spend.
GWEN IFILL: Only last year, gas prices were at record lows: 90 cents a gallon for regular unleaded then, to $1.56 a gallon and higher today. But oil-producing nations, including members of the OPEC Cartel, agreed last year to limit the supply of oil they put on the market, driving prices up to beyond $30 a barrel. After adjusting for inflation, these prices are still nowhere near historic highs set in 1980, which hit $2.66 a gallon. But the sudden price hike has affected the transportation industry, as well as individual commuters, sure ingredients for a political fight.
On Capitol Hill, some Republicans briefly called for a repeal of the 4.3-cent gasoline tax passed in 1993. Vice President Gore cast the deciding vote on the economic package that included the tax, and Republican leaders were eager to dub it the "Gore Tax." But that idea was pulled off the table, as Democrats and Republicans said repealing the tax would hurt transportation funding. Others in Congress and in the trucking industry are calling on the administration to release oil from the nation's strategic petroleum reserve. That reserve contains 600 million barrels of oil in Texas and Louisiana. It was set aside by a 1975 law for use in a national emergency.
Among other key proposals under consideration on Capitol Hill: The creation of a home heating oil reserve to cushion against a repeat of this winter's price hike; a cut-off of foreign aid to countries involved in what the U.S. contends is price- fixing; and allowing oil drilling in Alaska's Arctic National Wildlife Refuge. Appearing on Capitol Hill today, Energy Secretary Bill Richardson got some gentle ribbing from House Republicans.
SPOKESMAN: This is Secretary Richardson. He's the one that is responsible for the prices you see when you drive down... (Laughing)... when you drive down the street.
GWEN IFILL: Richardson went on say that gas prices could soon be on the downswing.
BILL RICHARDSON, Secretary of Energy: Now here's my hope, and I can't offer any assurances: that if OPEC meets, and they decide to increase production at a sizable level, late spring, early summer, you will see a gradual decrease in gasoline and diesel prices-- gradual.
GWEN IFILL: Later, at dueling Capitol Hill news conferences, the debate quickly broke down along party lines.
REP. TOM DeLAY, Majority Whip: This administration has done nothing to eliminate the problem. In fact, the Clinton and Gore policies are hurling us all back to the Jimmy Carter days, when this great nation was at the mercy of OPEC and their extortion scheme. Even Bill Richardson, Clinton's own energy secretary, has admitted that the administration was at fault when he said that the administration was asleep at the switch.
GWEN IFILL: A few minutes later, House Democrats held a news conference of their own.
REP. MARTIN FROST, (D) Texas: This is a false political action on the part of this Republican leadership that won't even do very much to affect the price of a gallon of gasoline, but they simply want to play politics with energy policy. This is a sad day. There are some of us who for years and years have been trying to pass energy legislation in this Congress, and all the Republican leadership has done is opposed everything that's constructive.
GWEN IFILL: Oil-producing nations are scheduled to meet March 27 to consider increasing production.
Joining us now to help explain the reasons behind the new high prices at the gas pump Gary Ross, chief executive officer at the PIRA Energy Group, an international energy consulting firm; Walter McCormick, Jr., president and CEO of the American Trucking Associations; Carl Pope, executive director of the Sierra Club; and Howard Metzenbaum, the former Ohio Senator who is now chairman of the Consumer Federation of America. Mr. McCormick, truckers are coming to Washington tomorrow to protest these high prices. Have we really reached crisis stage?
WALTER McCORMICK, Jr., American Trucking Association: We have a crisis, and we don't use that term lightly. The trucking industry has seen a 50 percent increase in the price of fuel since last year. What that means for the average trucker is that the cost of filling up his truck is increased $150 every time he goes to the pump. Now, as goes trucking, so goes the U.S. economy. 70 percent of the cities in America are reliant exclusively on trucking and 81 cents out of every transportation dollar is spent on truck transportation.
GWEN IFILL: Senator Metzenbaum, what impact are these prices having on consumers?
HOWARD METZENBAUM, Consumer Federation of America: They're absolutely deadly, as far as consumers are concerned. They're raising prices as much as $400 a year for the American consumer. You're talking about people who need their cars to go back and forth to work. You're talking about people who are - who are driving trucks and costs have been passed on to the consumer. In my opinion, there's only one solution, and the administration should be doing it now. Bill Richardson, the Secretary of Energy, should be doing it, and that is we've got almost 600 million barrels of oil in the strategic petroleum reserve. I have called upon the President publicly, a man whom I support, but with whom I disagree at this point, for not having released some of the oil that's in the strategic petroleum reserve. If he were to release - if the government were to release two to three million barrels of oil a day, you'd bring down prices, you'd break the hold that the Arab oil nations and the OPEC nations have on the American economy, and it would be exactly the right thing to do. And I strongly urge the administration to act not a month from now, not waiting for the OPEC nations to act but to act now to start releasing oil from the strategic petroleum reserve.
GWEN IFILL: Mr. Pope, is that part of the solution?
CARL POPE, Sierra Club: I don't really think it is. I think we have here a long-term problem. We had this in 1974. We had it in 1979. The old saying is fool me once, shame on me; fool me twice, shame on you. The OPEC nations know they can do this to us because for 25 years we have refused to do anything to reduce our dependence on oil. If we were driving cars - which we easily could be -- that got 40, 50 and 60 miles to the gallon, (a), the price wouldn't go up and (b), if it did go up, it wouldn't put us at economic risk the way it does. We need to deal with this as a long-term problem. We need to get on with the business of reducing our dependence of oil, and in the short term we should stop exporting Alaskan oil to Japan, which the Federal Trade Commission says the oil industry is doing consciously to drive up prices on the West Coast. And we should certainly stop future mergers of big oil companies like ARCO, and BP. We have the ability here to unhook ourselves from this game that we get played. These are manipulated oil-price spikes and they'll be manipulated as long as we're dependent on the oil industry.
GWEN IFILL: Mr. Ross, is this a crisis? If it is, is this a question of OPEC's control over supply or consumer demand?
GARY ROSS, PIRA Energy Group: It's not a crisis. We were spoiled by very low prices last year. And now OPEC has responded a year ago and they cut production and now prices have moved up. Over $30 per barrel crude oil is not in OPEC's interest. And the market will lead to lower prices all the time. We expect that OPEC will raise their production. It's in their interest to do so because longer term at this kind of price it's going to bring forth too much in the way of new supplies. It's going to slow down demand growth and inevitably lead to lower prices anyway. They know that and they're definitely going to raise production at the upcoming meeting in order to bring prices back down to a level that they're far more comfortable with they think in terms of long-term supply and demand.
GWEN IFILL: Senator Metzenbaum, in your letter to the White House you cited Energy Department rules about releasing reserves from the strategic oil reserves. And you said that they should be reserved -- you quoted it as saying they should be reserved in the case of a severe oil supply disruption. Do you think we are at that point now where what we have is a severe oil supply disruption?
HOWARD METZENBAUM: Absolutely. And it was in 1992 when the Congress changed the law so that it would cover just exactly this kind of a situation. And I'm not at all clear as to why Secretary Richardson is not willing to recommend to the administration that we go forward and start releasing oil now. I don't want to wait to see what the OPEC nations are doing. I think it should be done today, tonight, tomorrow, but there ought not to be any delays. This may not affect people who are making large amounts of money, but for the average working person-- man or woman-- this is a crisis. And I believe that we ought to react, we ought not to be waiting for the benevolence of the OPEC nations to tell us when they're going to help us. We help them. We saved Saudi Arabia. We saved Kuwait. They were there when they needed us and in return what are they doing? They're slapping us in the face by continuing to increase oil prices. I think it's time for our government to act. And we've got the means to do so. And that is by using the strategic petroleum reserve.
GWEN IFILL: Mr. McCormick in view of the trucking industry, do you see another better short-term solution?
WALTER McCormick, JR.: The quickest way to provide relief is to increase supply. We have supply at our fingertips. All the President needs to do is to turn on the spigot. 600 million barrels of oil purchased at taxpayer expense is now available to lower the costs to those who are driving cars, driving trucks and depending on fuel for the movement of this economy.
GWEN IFILL: Okay. So let's talk, Mr. Pope, will supply. The Alaska oil refuge. I mean, in Alaska, there are oil reserves which could be drilled. There are off-shore areas which could be drilled to increase the domestic supply of oil. Is that something that we should be preserving?
CARL POPE: We really should. Those reserves will only come on supply when oil goes above $30 a barrel and we shouldn't let oil get above $30 a barrel. We should take common sense conservation measures, keep the price of oil down to a reasonable level. Those resources will never be economically viable. We don't have to choose between having wilderness and wild life in Alaska and having affordable gas in our tanks. All we have to do is say to the auto industry, you've got the technology, use it. All we've got to do is say to the oil industry is stop shipping American oil to Japan. The Alaskan oil we're producing....
GWEN IFILL: Is that realistic?
CARL POPE: It's very realistic. Europe is already doing it. We can dramatically increase fuel efficiency. Toyota is about to put a car on the road that will seat six - five passengers and get 60 miles to the gallon. There's no reason that General Motors, ford and Chrysler can't do the same thing; they just don't want to make the investment and haven't wanted to for 25 years.
HOWARD METZENBAUM: I've normally been in agreement with Sierra Club. When I was a Senator, I was quite often in agreement most of the time but to wait until something happens in Alaska, to wait until cars get better fuel efficiency, that is not helping the average people, working people in this country. We've got to do something now. I don't mean a week from now, a month from now, two months from now. I'm talking about now. It's possible to do. What's bothering me is that when it's possible to do, instead of doing something here, Secretary Richardson goes over to the Arab nations and goes to them and urges them to try to act in order to help us and they turned him down flatly.
GWEN IFILL: Mr. Ross, you wanted to get into this.
CARL ROSS: Well, you know, I think first of all, this idea that exports from Alaska lead to a reduced supply to the U.S. is ridiculous because we're getting other supply which would have gone to Japan coming to the United States. The SPR was intended to be used in case of emergency. There's no national supply emergency today. I mean, no one was out there complaining when prices were $10. The market works. It's supply and demand. And essentially now we're talking about $30 oil. If you look at the American consumer, they don't want fuel-efficient cars. They haven't been going out there to buy them. The average fuel efficiency of the American car is 20/21 miles per hour, 50 percent less than what it is in Europe, for example. Over 50 percent of new motor vehicle sales are light trucks, sport utility vans. The American consumer does not want, has rejected these fuel-inefficient (efficient) cars.
GWEN IFILL: Are you saying nothing needs to be done and we should leave it alone and it will work itself out?
CARL ROSS: Well, there's no question it will work itself out because the market indeed works. And that's what -- supply and demand works. It's not in OPEC's long-term interest to have over $30 oil. It will undermine their position over time. So there's no question, yeah, we could do certain things - we can open up certain areas to exploration and production activity. Why not? The industry has an excellent record in the Gulf of Mexico drilling off shore. Why shouldn't we open the Anwar domestic development? We have an Alaskan pipeline which is operating at 50 percent of capacity - it's ridiculous. We should open up the Anwar. We should open up other areas because the industry actually has an absolutely good record in offshore oil exploration production.
GWEN IFILL: So, Mr. McCormick, wait and see, or wait and see and also expand domestic supply?
WALTER McCormick, JR.: This is not a situation where the market is working. What we have is forced scarcity. What OPEC is doing would be illegal in the United States. And do we have an emergency? Well, it's an emergency for a trucker whose costs have increased 50 percent. It is an emergency for potato farmers in Maine who cannot ship their potatoes because no truck drivers will drive up there and pay the cost of fuel.
GWEN IFILL: Mr. Pope?
CARL POPE: Well, the argument that we have a great record from the oil industry, I mean, I'll remind everyone about the Exxon-Valdez. They haven't had such a great record. And the fact is that we have... people aren't refusing to buy fuel-efficient sport utility vehicles; they're not being offered fuel-efficient sport utility vehicles. Yes, people want an SUV. If you go to the average person and say would you rather have one that gets 30 miles to the gallon instead of one that gets 10 miles to the gallon, you'll get a lot of customers. Detroit won't make them because Detroit doesn't want to invest in the technology they have to make them. We need to say to Detroit just as we did in the '70s, make these cars efficient, make these light trucks efficient, make these SUV's efficient and we can bring the price of gasoline down incredibly fast on a permanent basis. We can lick our dependency on oil. And that's what we need for the long term.
GWEN IFILL: So, Senator, what should consumers be doing? As is conceivable, the White House does not move to release the oil reserves and as is conceivable, Detroit doesn't move quickly enough, what can consumers be doing?
HOWARD METZENBAUM: Consumers ought to be raising hell with their congress persons and their senators and demanding that they insist that the White House move-- particularly Secretary Richardson. I believe that Secretary Richardson is exactly the point man on this. I'm certain that the President would be listening to his advice. But I think he's the point man. Now, when the Sierra Club talks about lower fuel-efficient cars, sure, that's fine but that's manana, that's way down the road some time. When the gentleman from New York talks about producing more oil in Mexico and other places, that's also down the line. That's fine. But what I'm talking about is today. The American consumer is getting shafted. He's getting the short end of the stick or she's getting the short end of the stick, and something has to be done not a week from now or a month from now but now.
GWEN IFILL: Are we spoiled by low gas prices, Mr. McCormick, last word?
WALTER McCormick, JR.: No, our economy moves on fuel and the Vice President said earlier he's going to keep the prosperity going. The prosperity will not keep going without low fuel prices.
GWEN IFILL: Gentlemen, thank you all very much