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Surging Gas Prices Pump Up Political Debate

Times Staff Writers

Record-high gasoline prices surged to the forefront of the presidential campaign Tuesday, as OPEC prepared to consider new production cuts and Republicans and Democrats faulted each other for failing to halt the spiral.

Democratic presidential contender John F. Kerry said President Bush should stop pumping oil into the government’s emergency reserves, which could dampen prices, and should pressure OPEC to open its taps. His campaign sought to link high gas prices to the resumes of Bush and Vice President Dick Cheney, both former oil industry executives.

Bush aides accused Kerry of advocating higher gas taxes in the past and criticized lawmakers for not passing the president’s energy plan. Members of Congress called for more drastic moves to appease aggravated motorists.

A Low Note

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Industry experts said it was unlikely any of their proposals would provide much relief. “In terms of the impact on the price of gasoline, it might be a penny a gallon,” said energy economist James Williams. “The kinds of things you can really do something about are the kinds of things neither party has the stomach for.”

Los Angeles motorists expressed similar doubts. “It’s called election-year rhetoric,” said John Coleman, 61, who shelled out $100 to fill the tanks of two Temple Community Hospital transport vans at a downtown Mobil station.

Rising prices, he said were “hurting business on one side. Then with the commuting we do, it’s cutting into our wages on the other.”

The debate could signal that energy policy would have a prominent role in this year’s presidential election campaign. Kerry’s attack on the president was part of a broader pitch for reducing dependence on foreign oil. Bush’s rebuttal included a reminder that shortages of natural gas and electricity deserve attention too. On Capitol Hill, both sides promised to turn up the heat on energy legislation.

The initial spark was provided by Kerry, who blamed Bush for contributing to an 11.5% increase in gasoline prices since taking office in 2001. He said the price hikes were costing the average American family $289 a year.

The nationwide average price of regular unleaded gasoline set a record of $1.758 a gallon Monday, according to the U.S. Energy Department. The average pump price in California was $2.079, down 0.4 cent.

“I’ll tell you what, If the gas prices keep rising at the rate they are now, Dick Cheney and George Bush are going to have to car pool to work,” Kerry told supporters at UC San Diego after stopping by a Shell station, where a gallon of regular was going for $2.20. “Those aren’t Exxon prices, those are Halliburton prices.”

Kerry accused Bush of not fulfilling a 2000 campaign promise to pressure OPEC to boost production to keep prices in check. The price of crude has risen far above the cartel’s target range of $22 to $28 a barrel in recent months, but OPEC ministers are expected to discuss further production cuts during a meeting today in Vienna.

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Kerry also criticized the president for continuing to pump crude into the Strategic Petroleum Reserve, which reduces the amount of oil available for refining and puts upward pressure on prices.

Kerry said the price problem was being exacerbated by a patchwork system of more than 300 local and state fuel regulations that limited the ability to move gasoline from areas where it was plentiful to those where it was in short supply. He promised to simplify the system if elected president.

The Bush camp unveiled a television ad accusing Kerry of supporting a 50-cent increase in the federal gasoline tax. Titled “Wacky,” the ad features fast-motion, black-and-white action sequences resembling scenes from a Charlie Chaplin comedy.

“Some people have wacky ideas, like taxing gasoline more so people drive less,” a narrator says, as the ad shows cars driving in circles and a man pushing his antique auto up a hill.

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“Maybe John Kerry just doesn’t understand what his ideas mean to the rest of us,” the ad says.

Bush underscored the message during an appearance in Appleton, Wis., where he defended his efforts to boost the U.S. economy. “We don’t need to be raising the federal gas tax,” the president said.

“I think it would be wrong. I think it would be damaging to the economy.”

Two Boston newspapers quoted Kerry in 1994 as verbally supporting a 50-cent increase in the gas tax as part of a larger deficit-reduction package. However, the Kerry campaign says the senator never voted for a 50-cent gas tax hike, nor did he ever sponsor legislation to enact one.

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Bush has so far resisted calls to suspend oil deposits in the government’s strategic reserve, saying the reserve should be used only to address supply issues, not pricing. On Tuesday, the president called on key lawmakers to resolve their differences over his comprehensive energy plan. He said its passage was needed to reduce dependence on foreign oil, to bolster domestic reserves of natural gas, modernize the nation’s electrical grid and encourage energy conservation.

Federal lawmakers, who have heard pleas from financially strained constituents, were quick to take up the debate.

“High gas prices are going to hurt this administration politically, and they’re not even wise enough to see that,” Sen. Charles E. Schumer (D-N.Y.) said at a news conference. “All we’ve gotten from this administration is silence.”

Schumer contended that the gas price increases would ffectively negate Bush’s tax cuts. “What Uncle Sam is giving with one hand, he’s letting OPEC take away with the other,” he said.

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Anger at OPEC

Some lawmakers said the administration should lean on OPEC to reduce oil prices. A group of 28 senators wrote to Bush urging him to “aggressively pressure OPEC” to forgo planned production cuts.

“We are extremely concerned that OPEC’ s control of global oil prices will continue to directly affect America’s economic well being unless the administration takes an active and aggressive role in pressuring OPEC to increase production,” wrote the senators, who included one Republican, Olympia J. Snowe of Maine.

A bipartisan group of House and Senate members urged Bush to suspend shipments to the Strategic Petroleum Reserve to put more gasoline on the market. But Sen. Pete V. Domenici (R-N.M.), chairman of the Senate Energy and Natural Resources Committee, said Tuesday that suspending deliveries to the reserve would not affect gas prices by “so much as a dime.”

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In 2000, he said, President Clinton tried to reduce gasoline prices by ordering the sale of 30 million barrels of oil from the reserve. “When that oil hit the market, gasoline prices dropped by a total of a penny,” Domenici said.

Sen. Norm Coleman (R-Minn.) said in an interview that he supported opening up the stockpile because it would have an important psychological effect, sending a message that the government had left no stone unturned, , “even though every study shows that it’s not going to have a big impact on the bottom-line price.”

Chris Lehane, a Democratic strategist and former Kerry advisor, said politicians were sensitive to soaring gas prices because they affected voters like few other things that came up in a presidential campaign.

While the federal budget deficit and fight against terrorism may seem abstract, “when you’re paying $40 to $50 ... to fill up your car, it registers in a very real way,” Lehane said.

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But Kerry must be careful, Lehane continued, recalling how his old boss, Vice President Al Gore, was accused of opportunism in 2000 after calling for the release of oil from the Strategic Petroleum Reserve during another time of rising gas prices.

Independent analysts expressed doubts about Washington’s ability to do much in the short term to reduce high gasoline prices.

They said OPEC oil ministers were anticipating a seasonal drop in demand during the second quarter and were unlikely to raise production to appease politicians in the United States. Although the price of oil has risen above their target levels, much of the increase has been offset by the continuing decline of the U.S. dollar.

“They’re looking out for No. 1, and No. 1 is them, not us,” said Adam Sieminski, global oil strategist for Deutsche Bank in London. “Jawboning OPEC doesn’t really do a lot of good. The last few times U.S. administration officials have complained about OPEC’s behavior, I don’t think it’s been particularly helpful.”

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Suspending crude oil deliveries to the strategic reserve would have only an incremental effect on gasoline prices, analysts said, and it would undermine the goal of reducing the nation’s vulnerability to a supply shortfall. The government is currently filling the underground reserves at a rate of about 100,000 barrels a day, or less than 1% of U.S. oil consumption of about 20 million barrels.

Energy analyst Williams, president of WTRG Economics in London, Ark., said California in particular could prove impervious to short-term efforts to boost supply and rein in prices.

“California is very unique,” Williams said. “You use your own gasoline standards. It’s not the blend of gas that’s used on the Gulf Coast. There are no substitutes from other parts of the country. You’ve got your own isolated markets with your own particular requirements. Your refineries are running at capacity, and you’re not building any new ones.”

His skepticism was shared on Southland streets.

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At a Mobil gas station at Rampart Boulevard and Temple Street, John Weaver, 52, pumped gas into his 2001 Volkswagen Bug. These days, Weaver said, he does not even fill up his tank anymore. Instead, he limits himself to $6 or $7 worth of gas at a time.

“If I run out, I’m not driving any more that day,” said Weaver, a supervisor at a local paper plant.

“Bush and Kerry can talk all they want, I don’t think either of them are looking out for the small guy,” Weaver said. “You know, the companies could even charge us $4 a gallon. What can we do about it? Nothing.”

At a Shell station in San Diego where Kerry stopped to check prices, attendant Kevin Burlingame was unconvinced after speaking to the candidate. Asked later by reporters what he thought a president could do, Burlingame expressed doubts.

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“He can introduce policy,” Burlingame said. “But overall, I don’t think he can affect gas prices.”

*

Contributing to this report were Times staff writers William Wan and Elizabeth Douglass in Los Angeles, James Rainey in San Diego, Maria L. La Ganga and Mark Z. Barabak in San Francisco, Ronald Brownstein in Washington, and Johanna Neuman in Appleton, Wis.


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