Climbing Gas Prices Expected to Be Hot Topic in Campaign

It won’t be a rerun of the 1970s, when long lines at the gasoline pumps spelled big trouble for politicians, but soaring gasoline prices are expected to become a serious issue in the 2000 election campaign by early summer.

Although the topic still hasn’t heated up in either the presidential or congressional races, the White House and political candidates in both parties are bracing for a brouhaha over gasoline prices, beginning in late May and intensifying throughout the following few months.

The two major parties already have begun gearing up to exploit the issue. Congressional Republicans are blaming the Clinton administration--and Vice President Al Gore--contending that they did not do enough to spur more domestic production, thus leaving America vulnerable.

Congressional Republicans already have called for repeal of the 4.3-cent-a-gallon rise in the federal gasoline tax enacted in a 1993 White House budget deal, and GOP presidential front-runner George W. Bush reportedly is considering that. Democrat Gore opposes the move.

Even the White House has been jittery. Earlier this month, President Clinton raised the possibility that he might flood the market with crude oil from the nation’s Strategic Petroleum Reserve, despite assertions by his Energy secretary that such a move would be ill-advised.

“Both sides are filling up their ideological fuel tanks,” said Marshall Wittmann, political analyst for the conservative-oriented Heritage Foundation. “Everyone is anticipating that it will become a big issue in the summer.”

To be sure, the political heat from higher oil prices has been surprisingly mild so far. Earlier this month, truckers staged protests over the rising cost of diesel fuel. Before that, some homeowners in New England complained about soaring prices of home heating oil.

Nevertheless, while gasoline prices have soared throughout the country, voters have been docile. Analysts say the economy is so good that drivers don’t feel the pinch. There still are no shortages--or long lines at the pumps--such as those that fueled the backlash in the 1970s.

Gas Prices Expected to Surpass $2 a Gallon

But pundits say the pain--and the howling--are likely to become decidedly more evident by summer, when gasoline prices nationally whiz past the $2-a-gallon mark--they’re already there in San Francisco--inflation intensifies and airline fares rise sharply.

“Consumers in much of the country will be paying more than $2 a gallon for much of the summer,” said Philip K. Verleger, an oil markets expert at the Brattle Group, a research company. “There’s no question that this will be a major political issue.”

There also may be enough sporadic shortages to draw more media attention and panic the public. Oil experts say U.S. crude oil inventories are low, and refineries soon will have to shift to specially clean fuel to meet EPA regulations--a combination that could spark some bottlenecks.

Republicans have seized on the rise in gasoline prices to score points against the administration. In Brandon, Miss., on Monday, Bush called on Clinton to pressure oil-producing countries to boost their output to repay the United States for past favors.

“The administration must use its leverage to get something done,” Bush said. “If they can’t get something done it shows how weak we are diplomatically around the world.” At one point he charged that “the administration does not have a national energy plan.”

Proposals to Cope With Rising Costs

There are plenty of proposed solutions on the table:

* Republicans want to repeal--at least temporarily--the extra 4.3-cent-a-gallon gasoline tax enacted in 1993, as a way to provide relief from rising gasoline prices. The tax hike was added in a deal between Clinton and Congress, and Gore cast the tie-breaking vote in the Senate.

* Contending that the administration has discouraged increased oil exploration in the United States, Bush and Western Republicans are pushing new legislation to permit oil drilling in the Arctic National Wildlife Refuge in Alaska and to end numerous bans on offshore drilling.

* Activists want the administration to flood the crude oil market with supplies from the nation’s Strategic Petroleum Reserve, a 565-million-barrel pool established in 1977 to provide the military and defense contractors with a cushion in case global supplies were cut off.

* Clinton himself could engage in “jawboning,” summoning oil industry executives to the White House to pressure them to hold prices down despite the continued rise in world crude oil prices. Previous presidents have tried that, though with very mixed success.

But analysts say each of those proposals has its drawbacks as well. While repealing the 4.3-cent tax may make gasoline cheaper now, it also would encourage more fuel consumption, which would increase pressures for higher prices later.

Environmentalists oppose easing restrictions on oil drilling, arguing that the current limits help guard against coastal pollution and destruction of natural resources in Alaska and other areas. And any benefits on prices wouldn’t come for at least several years.

Flooding the market with oil from the strategic reserve would depress prices temporarily, the U.S. would be more vulnerable strategically in case of a cutoff in oil imports. And Washington would have to rebuild the reserves in the medium term anyway.

Energy Secretary Bill Richardson has cautioned that the reserve is designed to deal with actual shortages, not just to help offset price increases. “We should use the [reserve] when it’s only dire national emergencies, and this is not a national emergency,” he said earlier this month.

Finally, jawboning could backfire--as it has in the past. Reflecting a broad view among industry analysts, Verleger, for one, warns that if Clinton tries to pressure the industry into holding the line, the result could be supply interruptions and long lines at the pump.

Indeed, most analysts believe that neither party can really do much to relieve the situation, which is due primarily to a production hold-down by Middle East oil producers and increased demand worldwide as a result of the recovering global economy.

The 11-nation Organization of Petroleum Exporting Countries is moving toward an agreement at its March 27 meeting to boost its crude oil production by about 1 million to 1.5 million barrels a day, but the increase is not expected to lead to any major reduction in oil prices.

Crude oil prices have almost tripled since last year, when OPEC took 5 million barrels a day off the market to eliminate an oil glut that had depressed prices for months. Crude oil is now about $32 a barrel.

In any case, most forecasters expect oil prices to keep rising through the spring, no matter what the administration or Congress does, and oil companies traditionally raise gasoline prices sharply just before the Memorial Day weekend, the start of vacation season.