Lawmakers Tackle Oil Price Issue, Only to Slip

Members of Congress are flailing about trying to look as though they are doing something about rising gasoline prices, but so far they have been stymied by two immovable obstacles: politics and the laws of supply and demand.

Over the last 2 1/2 weeks, lawmakers in both the House and Senate have been rushing to call news conferences, issue bold statements and offer sweeping proposals to deal with the problem, only to have to hedge or even back away later.

The latest congressional gambit came Thursday, when Sen. Barbara Boxer (D-Calif.) proposed prohibiting the export of Alaskan crude oil--a plan that economists immediately called dubious and political analysts predicted would not go anywhere.

Not only would the proposal likely boost world oil prices, experts said, but it also would spur the ire of the Alaskan congressional delegation, including Senate Appropriations Committee Chairman Ted Stevens--making its chances for passage minuscule.

The most dramatic pirouette has come from congressional Republicans. Two weeks ago, several GOP senators representing oil states called for repeal of the 4.3-cent-a-gallon addition to the federal gasoline tax that President Clinton negotiated in a 1995 budget deal. The opportunity seemed too good to be true. Without much to lose, the Republicans would be able to blame the extra gasoline tax on expected Democratic presidential nominee Al Gore--who as vice president broke a tie vote in the Senate to help pass it--and take credit for cutting the cost at the pump.

Within a few days, however, House Republicans had cooled to the plan after economists pilloried it and Transportation Committee Chairman Bud Shuster (R-Pa.) warned that it would deprive states of $18.8 billion in highway construction money. Now the measure’s prospects appear dim.

The House is expected to vote soon on a proposal by its International Relations Committee that Clinton pressure the Organization of Petroleum Exporting Countries to step up production in an effort to stem the rise in world prices. That seems unlikely to matter much.

Oil-producing countries did agree earlier this week to boost production slightly over the next few weeks, but the effect will not be felt for several more months.

Boxer on Thursday also called for imposing a moratorium on mergers between giant oil companies, such as the proposed joining of BP Amoco and Arco now awaiting review by federal regulators. She blamed the mergers for contributing to the recent price hikes. But most oil analysts disagree, and the measure has little chance of advancing.

Other plans floated by lawmakers have ranged from flooding the market with crude oil from the U.S. Strategic Petroleum Reserve--a move that Clinton also is considering--to toughening the federal fuel economy standards for auto makers--a step that is not likely to clear Congress any time soon.

The effort in Washington has been matched by similar moves at the state and local levels. On Wednesday, for example, Republicans in the California Assembly began a push to eliminate the state’s 8% gasoline tax. Speaker Antonio Villaraigosa (D-Los Angeles) backed at least a temporary suspension.

Truckers have provided a major impetus for politicians. Earlier this month, dozens of them drove their big rigs around the Capitol in a bid for media coverage of the sharp rise in the price of diesel fuel. On Thursday, they repeated the demonstration.

Politically attractive as the various proposals may seem, oil experts said that most of them would have little real effect and some would even worsen the situation, either by interrupting supplies or encouraging motorists to buy more gasoline instead of cutting usage.

Analysts said that the current “spike” in oil prices has come primarily because OPEC producers have intentionally cut back on production to improve their revenue flow while global demand has increased. Factors spurring that demand include the recovery of Asian economies and the popularity of gas-guzzling sport-utility vehicles among U.S. consumers.

Ed Kraples, director of Energy Security Analysis Inc., a Boston-based energy-monitoring group, said that the country probably would be better off if lawmakers did nothing and allowed the marketplace to take care of the problem.

“The high gasoline prices already have begun to crimp demand,” Kraples said. “OPEC has increased production and Americans seem likely to cut back on their vacation plans. We call ourselves a free-market country. Let the market do its job.”

Philip K. Verleger, an oil economist with the Brattle Group, a Boston-based research company, agreed. “The smartest thing Congress could do in terms of energy policy right now is take a six-month recess.”

Kraples was especially critical of Boxer’s call to restrict exports of Alaskan oil. Such a move, he said, would simply force other countries to buy more elsewhere, pushing prices higher and disrupting flows.

“It’s just amazing that people come up with things like that,” Kraples said.

But those backing the proposal included Rep. George Miller (D-Martinez), the top Democrat on the House Resources Committee.

“At this critical time of record high oil prices and tight supplies from foreign producers, it does not make sense to sell precious domestically produced oil overseas,” he said.

Clinton hinted Thursday that he is likely to unveil some new measures soon for dealing with the gasoline price problem, but he left the impression that whatever steps he proposes are likely to be modest.

“I do believe we need to do more on our own here in America to deal with some of the . . . pressure points,” he said.

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Times staff writer Richard Simon contributed to this story.

* GAS BOYCOTT: A three-day “gas out” protest is wrongheaded, writes Liz Pulliam Weston in Money Talk. C4