Proposals to cut gas prices abound in 3 campaigns

Some of the proposals border on ‘the irresponsible,’ one expert says.

WASHINGTON (AP) — Get rid of the federal gas tax — at least for the summer. Tax Big Oil to help the rest of us out. Get drilling in that Alaska refuge. Soaring gasoline prices are suddenly the nation’s No. 1 crisis, and all the presidential candidates are offering cures.

Never mind that economists and energy experts see little value in such measures, at least in the short run. Or that even some top congressional leaders are raising eyebrows. It’s election season, and presidential contenders and other politicians are jumping on the bandwagon.

The slew of proposals includes: a summertime suspension of federal gas taxes, backed by John McCain and Hillary Rodham Clinton; a windfall-profits tax on oil companies, supported by Clinton, Obama and many other Democrats; a cry for new refineries, nuclear power plants and drilling in the Alaska wilderness, sounded by President Bush and his GOP allies; calls by those in both parties to stop buying oil at $117 a barrel — only to pump it back into the ground for strategic reserves.

“I think we are in a political crazy time. Some of this stuff being proposed borders on the irresponsible,” said Frank Verrastro, director of the energy and national security program at the Center for Strategic and International Studies.

In particular, said Verrastro, the talk of suspending the federal 18.4-cents per gallon federal tax on gasoline and 24.4-cents per gallon tax on diesel fuel during the summer driving season “is just absurd. Economics 101 will tell you if you cut the price, you increase demand. That means you tighten the market. Then the price goes back up. It goes to oil companies.”

House Speaker Nancy Pelosi, D-Calif., weighed in against the scheme Thursday, telling reporters that “there’s no reason to believe that any moratorium on the gas tax would be passed on to the consumer.”

New York Mayor Michael Bloomberg also opposed the plan as a “ridiculous idea.” Polls have shown that economic concerns, now primarily higher food and fuel costs, have replaced the Iraq war as the issue of greatest concern to voters. And just 27 percent of citizens approve of Bush’s economic management, an Associated Press-Ipsos poll showed. Regular unleaded gasoline averaged $3.60 a gallon last week.

The major proposals:

U A summer “tax holiday” between Memorial Day and Labor Day, first proposed by McCain. “Just give the American people a little break for the summer. Maybe they can go a little further, maybe they can buy a better meal,” says the Arizona Republican.

U Clinton, trying to revive her chances, jumped aboard the McCain plan — and upped him one by proposing paying for an estimated $9 billion in lost tax revenues with a windfall profits tax on wealthy oil companies. The New York Democrat launched a TV ad in next-up primary states Indiana and North Carolina attacking Obama for saying “no” to the gas tax holiday. “Senator Obama won’t provide relief, while Senator McCain won’t pay for it,” she said at a campaign stop in Indiana.

Obama decried the proposal as a gimmick not designed to ease Americans through driving season but to get McCain and Clinton “through an election,” even though he supported a state-gas-tax repeal as a state senator in Illinois. He said it would, at best, save drivers 30 cents a day, or “less than you can buy a cup of coffee for at 7-Eleven.”

U President Bush, who can’t run again but sees his party’s hopes of doing well in November as hinging on issues such as energy, blamed Congress for failing to reduce gas prices. At a Rose Garden news conference this week, he dusted off old proposals to allow oil and gas exploration in the Arctic National Wildlife Refuge and to facilitate the building of more refineries and nuclear power plants. “These are very difficult economic times,” he said. He said he would study the gas-tax holiday proposal, but didn’t sound enthusiastic about it.

Democrats in the House and Senate are also separately working on energy packages designed to restrain gas prices, such as holding OPEC accountable for price fixing, cracking down on price gouging, and repealing subsidies to the most profitable oil companies.

“These are almost identical to proposals that were made in 1973 and 1974 when I was working for Hubert Humphrey on energy. There’s nothing new there and there’s no free lunch,” said James Thurber, director of the Center for Congressional and Presidential Studies at American University.

“Unless people running for office are willing to have a fundamental change in the way we produce energy and use it, we’ll continue to have these problems. And they’ll only get worse in the future. And none of these proposals will do anything to stop the current problem,” Thurber said.

Congress enacted a windfall profits tax in 1980, during an earlier era of high oil prices, but repealed it in 1988 amid concerns the tax was discouraging domestic oil development. Last year, the House approved $18 billion in new taxes on the largest oil companies, but it was blocked by Republicans in the Senate.

The U.S. Strategic Petroleum Reserve, established in underground salt caverns in Texas and Louisiana in the aftermath of the 1973-74 oil embargo, has been a political football since the beginning.

In 2000, then-candidate Bush charged that President Clinton had engineered a price-relieving release of oil reserves to aid Vice President Al Gore’s presidential bid. However, it seemed to have little effect, either on gas prices or Gore’s candidacy.

As president, Bush has moved to keep filling the 700-million-barrel reserve, a policy he reiterated this week. He did allow the reserve to be tapped once: soon after Hurricane Katrina, to refiners whose supplies were disrupted by the storm.