Passing the Buck on Energy
April 17, 2006
While Americans are experiencing sticker shock at the gas pump these days, the retiring chairman of Exxon Mobil is counting his millions. Lee Raymond is getting "one of the most generous retirement packages in history," worth nearly $400 million. The news of Raymond’s large retirement package is only fueling more frustration with the increasing cost of gasoline. And while the oil industry is coming under some fire, they are trying to deflect blame anywhere else they can.
- While no one was paying attention, gas prices have skyrocketed in the past few weeks. Gas prices have soared in recent weeks, jumping to an average $2.68 per gallon nationally, roughly 40 cents more than this time last year. And as summer approaches, they are sure to go higher. Price increases last year were explained away by Hurricane Katrina, but the increases this year come at a time when there are no shortages or hurricanes. Today crude oil hit 70 dollars a barrel in the Asian market and was climbing above $69 on the New York Mercantile Exchange. According to a AAA spokesman: "Motorists need to prepare themselves for the possibility that gasoline will continue to go up each year. There will be peaks and valleys, but prices will keep going up."
- Instead of accepting responsibility, the oil industry is trying to pass the buck onto ethanol. In a letter (PDF) circulated to every member of Congress, the American Petroleum Institute (the oil industry's main lobbying group) blamed the current rise in gas prices on ethanol. Basically the oil companies say they have to charge higher for gas because last year’s energy bill required them to clean up their gas with better, cleaner oxygenates — and phase out the noxious MTBE. They claim this change from MTBE to ethanol is behind the increase in gas prices.
- The truth is, ethanol is not to blame for rising gas prices. Producers of ethanol say there is plenty of it to go around. "For years, the oil companies lobbied Congress to limit the Renewable Fuels Standard (RFS) for ethanol in the energy bill to just 5 billion gallons in 2012. But now they are complaining that there will 'only' be 5 billion gallons of ethanol available in 2006." The industry is now being scapegoated for rising fuel prices. The fact is, ethanol will actually make fueling our cars far less expensive. Within 10 years, American farms could produce biofuels at costs equal to between $0.59 and $0.91 per gallon of gasoline and $0.86 per gallon of diesel.
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