Congress to see more theatrics over high oil
WASHINGTON (Reuters) - Lawmakers will clash this week over strategies for combating high gasoline prices and repealing tax incentives enjoyed by big oil companies, but there is little chance of a breakthrough for drivers.
U.S. gasoline prices edged up less than a penny to $3.97 a gallon last week, about 14 cents off the record hit in 2008, the Energy Department said on Monday. U.S. oil prices rose more than $5 to above $102 a barrel on Monday after dropping 15 percent last week.
"There's not much Congress can do" to bring down oil prices in the short term, said Pietro Nivola, a senior fellow in governance at the Brookings Institution, a nonpartisan public policy organization. "The price of oil is set in a global market and we don't control that."
But Democrats and Republicans in Congress, seeking to please their constituents, will try to take action ahead of the presidential and congressional elections next year.
The focus in the Republican-controlled House of Representatives is on forcing President Barack Obama to open up offshore oil drilling, a resource conservatives say has been put in a stranglehold by regulations after the BP oil spill in the Gulf of Mexico last year.
Republicans see high oil prices as a key problem they can blame on Obama after the killing of Osama bin Laden has quieted charges he is not strong enough to lead a nation at war and facing terrorist threats.
U.S. House Speaker John Boehner charged on Monday there's "a clear connection" between rising gasoline prices and the weak dollar. "When you print tons of money, the dollar sinks," and the price of energy rises, he said in a speech prepared for delivery to the Economic Club of New York.
Some critics have accused the Obama administration of turning a blind eye to the dollar's decline. Since most U.S. oil is imported, the declining value of the dollar has helped boost the price of petroleum.
The House is slated to vote this week on legislation to set a 60-day deadline for the Interior Department to decide on new offshore drilling permits, one of three bills on opening up drilling.
Last week, the chamber passed a bill that would force the government to conduct lease sales for oil exploration off Virginia and in the Gulf of Mexico.
But the bills will not likely pass in the Senate amid stiff Democratic opposition. The White House said it opposed the lease sale bill because the legislation would undermine safety measures taken after last year's spill.
"The battle lines have been drawn," said David Pumphrey, a fellow at the Center for International and Strategic Studies and former official at the Department of Energy.
"There's a lot of theater right now. It's hard to see how we get closure on meaningful, long-term policies that would have an effect on oil prices."
For their part, Democrats are focusing on getting tough on Big Oil by repealing billions of dollars in tax breaks for the five major oil companies including Exxon Mobil and Chevron.
Senate Majority Leader Harry Reid said he wants a bill to cut the incentives to be voted on soon. "As gas prices and oil company profits keep rising, each senator will soon have the opportunity to stand with the millionaires or with the middle class," Reid said on the Senate floor on Monday.
In response, Republicans said such a move would amount to a tax on companies they would pass to consumers in the form of even higher oil prices.
"Americans are looking for answers. And yet all they're getting from the President and Democrat leaders in Congress are gimmicks and deflection," said Senate Minority Leader Mitch McConnell.
Sparks may fly on Thursday at a hearing on cutting the incentives called by Senator Max Baucus, who has invited executives from the oil companies to testify. Baucus released a plan last month to end breaks for the industry.
The Obama administration is also trying to tackle speculation in petroleum markets in hopes of pushing down prices. Attorney General Eric Holder directed a taskforce to look into whether gasoline prices were falling in the wake of the drop in the cost of oil.
Senator Carl Levin, who heads a panel on investigations, said last week he also plans to examine speculation in the oil market. He said the crash in oil prices was proof that speculators are behind volatility in commodity markets.
But analysts said investigations by themselves are unlikely to drive down energy costs.
"Politicians do this every single time there is a run up in energy prices," Brookings' Nivola said. "They might find an occasional example of price gouging, but it's ordinarily not easy to widely prove, no matter what kind of investigation they do."
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