Prepare for a long summer of blame

By ERIC PETERS
KNIGHT RIDDER/TRIBUNE
WASHINGTON -- The CEOs of America's oil companies can expect to spend a long, hot summer testifying before committees of angry lawmakers demanding to know why gas prices are rising just as their constituents are leaving on summer vacations.
If one of the assembled titans of industry can marshal enough intestinal fortitude, he should grab the mike and say, "Frankly senator, it's because when you passed that comprehensive energy bill last year, you cared more about corn farmers than motorists." Truth-telling is rarely in vogue in the House and Senate, but this is one truth that needs to be told to thwart endless rounds of political demagoguery even if gasoline prices shoot through the $4 a gallon barrier in June and July.
Even now prices already are at their highest level since last October and the finger of blame should point squarely at most of our elected representatives on Pork Chop Hill.
The energy bill they passed last year had enough pork in it to supply all of the Cracker Barrel and Bob Evans franchises for the rest of the decade. Two particular actions will create a nauseous smell in drivers' nostrils when they fill-up their tanks at freeway plazas this summer.
In a windfall for corn farmers, including some of the nation's largest agri-businesses, Congress mandated that refiners double the use of ethanol as an additive in gasoline to 7.5 billion gallons a year by 2012.
Federal tax breaks
That will mean a huge flow of new revenues to corn-growing corporations and independent farmers since ethanol already receives federal tax breaks of more than 52 cents for each gallon produced. Consumers will pay for those breaks in the form of higher taxes, and they will pay more for ethanol-laced gasoline at the pump because of the high costs associated with transporting it from the agricultural Midwest to East Coast and West Coast population centers.
Unfortunately, the congressional mandate has pushed another fly into the ointment. When they passed legislation doubling ethanol use last summer, no one on Capitol Hill thought to ask corn growers if that type of increase was feasible. Turns out, it's not.
When it passed the new ethanol subsidies, Congress also rejected limited liability protection for MTBE, a cheaper, more effective fuel additive than ethanol. Congress mandated MTBE into the gasoline pool in 1990 amendments to the Clean Air Act. The idea was to cut pollution in smog-shrouded urban sprawls like Los Angeles and New York City, and, in fact, the quality of air in both areas was measurably improved.
By the late 1990s, however, local officials discovered that MTBE was leaking from corrosive storage tanks at supply depots and gasoline stations on the East Coast and in southern California -- most of them not owned by MTBE producers or refiners.
That didn't stop personal injury lawyers from filing suit against the producers of MTBE and refiners that used the additive -- even though they were merely following a congressional directive to clean up the air. As a result, Valero, one of the largest manufacturers, is phasing out production. Many pipeline operators that transported MTBE to high-use areas also are backing off rather than face multi-million dollar lawsuits.
As MTBE was phased out, ethanol makers found they couldn't keep up with the surging demand for their product. Bob Dinneen, president of the Renewable Fuels Association in Washington, D.C., says his industry is swamped. "We're adding production as fast as we can, but I don't think anybody anticipated refiners would be hemorrhaging MTBE as quickly as they are."
Periods of downtime
The U.S. Energy Information Administration says ethanol production is running almost at its current capacity of 283,000 barrels a day, yet needs another 130,000 barrels a day to make up the MTBE deficit. Gasoline refiners, forced to modify their production processes to convert from MTBE to ethanol, also face some periods of downtime.
Oil company executives should explain all this in detail to the likes of Sens. Charles Schumer and Barbara Boxer when they are hauled before batteries of TV cameras at congressional hearings this summer. They would be performing a public service.
Eric Peters is a columnist for The Army Times and AOL.online. Distributed by Knight Ridder/Tribune Information Services