Republicans, Democrats Clash Over Higher Gas Prices Cause
U.S. House Republicans said regulatory uncertainty and bureaucratic delays pushed gasoline prices higher before the Memorial Day holiday, clashing with Democrats who said commodity speculation caused costs to rise.
House Oversight and Government Reform Committee Chairman Darrell Issa of California led Republicans in blaming the Obama administration for limiting exploration in the Gulf of Mexico, the largest source of U.S. domestic crude, echoing arguments by the American Petroleum Institute, an energy trade group.
“The United States has the largest reserves in the world - - resources that can provide good-paying American jobs and fuel our economic expansion,” Issa said in a statement before today’s hearing in Washington. “Standing between that energy and U.S. consumers is an obstacle course of government red tape, regulation, delays and obfuscations.”
Gasoline at the pump climbed 37 percent in the past 12 months, to an average $3.83 yesterday, according to the AAA’s website. The Interior Department, which halted exploration after the BP Plc (BP) oil spill last year, issued permits for 14 deep-water wells for companies including Exxon Mobil Corp. (XOM) and BHP Billiton Ltd. (BHP) after the industry demonstrated ability to contain spills.
Issa cited a Congressional Research Service report, showing reserves and estimated undiscovered oil and gas equal to 1.324 trillion barrels. U.S. proven reserves, at 28.4 billion barrels, account for 2.1 percent of the world’s resources, ranking 12th globally, according to BP Plc’s Statistical Review of World Energy 2010.
Crude Speculation
Proven reserves can be recovered from known reservoirs under current economic and operating conditions, BP said in the report.
An increase in domestic drilling wouldn’t change oil prices by more than 1 percent, while “excessive oil speculation” may be driving up prices as much as 30 percent, said Representative Elijah E. Cummings of Maryland, the panel’s top Democrat.
President Barack Obama formed a task force led by Attorney General Eric Holder to investigate potential manipulation in the commodities markets. He also allowed leases in the Gulf of Mexico and Alaska extension to encourage oil exploration, the Deputy Interior Secretary David Hayes told the House Oversight and Government Reform Committee today.
The Republican-led House this month passed legislation to open drilling areas along the Atlantic, Southern California and Alaska coasts. A similar bill fell 18 votes short in the Senate. Democrats blocked action, saying the measure ignored lessons from the 2010 BP offshore oil spill.
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net
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