ENERGY

Gas Price Scapegoating

"We're all in this together, everywhere in the world," one energy official testified to Congress last November when asked about rising gasoline prices. That official was Lee Raymond, the retiring chairman of Exxon Mobil. Raymond's definition of "all in this together": You pay $3.00 per gallon for gas. He racks up "one of the most generous retirement packages in history," worth nearly $400 million, "including pension, stock options and other perks, such as a $1 million consulting deal, two years of home security, personal security, a car and driver, and use of a corporate jet for professional purposes." News of Raymond's massive benefits has stoked further frustration with the high prices at the pump. The oil industry's response: blame renewable energy.

THE GAS PRICE SPIKE: Gas prices have soared in recent weeks, jumping to an average $2.68 per gallon nationally, roughly 40 cents more than at this time last year. And they're certain to increase further as the summer driving season begins; the federal Energy Information Administration last week "predicted a 25-cent-per-gallon rise in prices nationally this summer over last summer," when gasoline prices "briefly increased above an average $3 a gallon nationally when refineries along the Gulf Coast were shut down" following Hurricane Katrina. Then, adjusted for inflation, prices were "above records reached during the oil shocks of the late 1970's and early 1980's. There were even short-lived gasoline lines as supplies failed to reach consumers." This year, prices have risen sharply with crude oil climbing to $70 per barrel despite the fact that there "have been no shortages or hurricanes to blame." The New York Times reports that Americans "are increasingly facing the fact that inexpensive gasoline, like airline meals, has become a thing of the past." Says one AAA spokesman: "Motorists need to prepare themselves for the possibility that gasoline will continue to go up each year. There will be peaks and valleys, but prices will keep going up." (Find the least expensive gas prices in your area.)

BLAME ETHANOL: Last week, as members of Congress returned home for spring recess, Big Oil took the opportunity to pass along some misinformation about why it is not responsible for the high gas prices. In a letter circulated to every member of Congress, the American Petroleum Institute (the oil industry's main lobbying group) blamed current prices on ethanol. The gist of its argument: last year's energy bill ended an "oxygenate requirement" (oxygenates are fuel additives "that contain oxygen which can boost gasoline's octane quality, enhance combustion, and reduce exhaust emissions"). The oil industry had previously relied on a noxious chemical called MTBE to oxygenate its fuel. According to the letter, the end of the oxygenate requirement was "leading to the phase-out of MTBE" and the phase-in of ethanol. "While refiners are working day and night to meet this requirement," Big Oil told Congress, "they face complicated challenges in switching to ethanol, which has numerous logistical difficulties in its transport," and which is "currently more expensive than gasoline." The Wall Street Journal in turn protested the "Ethanol Tax," stating that today's higher prices are "the result of the ethanol love-fest that Congress engaged in last summer as part of its energy bill." NBC's Nightly News also featured a segment repeating the oil industry's line, backed up by analysis from the American Enterprise Institute, a conservative think-tank funded extensively by the oil and gas industry, and where Vice President Dick Cheney once served as a fellow.

THE FACTS ON MTBE: The oil industry's letter to Congress is extremely misleading. First, the energy bill passed last year did not force oil companies to stop using MTBE; what it did was fail to provide MTBE producers with legal immunity that would have shielded them from paying MTBE pollution clean-up costs. (Industry officials had insisted for years that MTBE was safe to use. In reality, it is a dangerous pollutant, as its manufacturers have known since the 1980s. In low doses, its "powerful turpentine taste" makes water undrinkable; in higher doses, it's likely a cause of cancer. It has already seeped into the nation's water supply, having been detected "in 1,861 water systems in 29 states serving 45 million Americans.") Because MTBE makers "were not granted the liability protection they wanted in the energy bill, they are abandoning MTBE sooner rather than later."

THE FACTS ON ETHANOL: While demand for ethanol will be significantly high in the short-term, producers say there is plenty of ethanol to meet the need. There are "currently 97 ethanol production facilities in operation in the U.S. with the capacity to produce 4.5 billion gallons of ethanol," already well ahead of the curve detailed in the energy bill's Renewable Fuels Standard (RFS). "The RFS called for 4 billion gallons of ethanol to be used in 2006, and that amount of ethanol was used already in 2005." Indeed, complaints about the availability of ethanol from the oil industry are particularly hypocritical. "For years, the oil companies lobbied Congress to limit the Renewable Fuels Standard (RFS) for ethanol in the energy bill to just 5 billion gallons in 2012. But now they are complaining that there will 'only' be 5 billion gallons of ethanol available in 2006." American farmers producing ethanol "say the industry is being scapegoated for rising fuel prices." "It's just not true," says Lee Reeve, president of Reeve Agri-Energy in Kansas, who has been blending ethanol for 25 years. "It's just an excuse to drive the price of gasoline up. Obviously, with or without ethanol the price of gas is pretty doggone high. The price of crude is high." In fact, ethanol will actually make fueling our cars far less expensive. Within ten years, American farms could produce biofuels at costs equal to between $0.59 and $0.91 per gallon of gasoline, and $0.86 per gallon of diesel.

Under the Radar MILITARY -- MYERS OFFERS WEAK DEFENSE OF RUMSFELD: This weekend, former Chairman of the Joint Chiefs Richard Myers attempted to defend Secretary of Defense Donald Rumsfeld from the increasing criticisms by retired U.S. generals. (A seventh general, retired Marine Lt. Gen. Paul Van Riper, added his name to the list of those calling for Rumsfeld's resignation.) Among their many frustrations, the retired generals have argued that Rumsfeld rejected the military's advice and sent in too few troops to secure post-war Iraq. In trying to defend Rumsfeld, Myers was forced to concede that senior administration officials had been wrong to criticize former Army chief Gen. Eric Shinseki before the war for saying that the mission could require "several hundred thousand soldiers." "He was inappropriately criticized, I believe, for speaking out," said Myers. But Myers disingenuously claimed that when Shinseki made his assessment of troop levels, he merely "pulled a number out" of thin air. In truth, as retired Maj. Gen. John Batiste, who led the 1st Infantry Division in Iraq, has said: "Our senior leadership chose to radically modify 12 years of very deliberate planning with respect to Iraq. Previous planning identified the requirement for three times the level of forces that we committed into Iraq to take down a regime and then build the peace." TAXES -- BUSH USES TAX DAY TO PUSH FOR MORE TAX BREAKS FOR THE WEALTHY: Over the weekend, before tax filings were due, President Bush used his radio address to ask Congress to extend his tax cuts permanently. "Tax relief has done exactly what it was designed to do," Bush said. "It has created jobs and growth for the American people." But the Los Angeles Times found that as the tax code's progressivity decreased under Bush, "tax rates have contributed to huge increases in the wealth of the wealthy, but so far most people haven't seen significant economic improvement." "It's as if Santa Claus dropped bags of money down everybody's chimney," said the Tax Policy Center's Leonard E. Burman. "Only he dropped extra-big bags in rich people's homes, and extra-small ones in smaller homes." One recipient of Santa's largest "bags of money" this year is Vice President Dick Cheney, who reportedly is entitled to a $1.9 million tax refund. The disparity between the wealthiest Americans and everyone else has grown. "Last year, for example, a typical corporate chief executive officer made 279 times the average pay of a non-supervisory production worker," according to an American Progress report. Meanwhile, conservative senators are using budget gimmickry to mask the deficits that more tax cuts for the wealthy would create. "That's amazing," the Washington Post's editorial board writes, "even from this Congress." ENERGY -- BRITISH PETROLEUM MAINTAINS PERILOUS ENVIRONMENTAL AND LABOR SAFETY RECORD: In 2000, British Petroleum (BP) adopted a new "green" public relations strategy, changing their slogan to "Beyond Petroleum" and their logo to an environmentally-friendly flower image. The BBC called it "part of a rebranding exercise...which the company hopes will boost profits." Six years later, BP's profits are surging -- up 25 percent last year to $22 billion -- but its image is taking a deserved beating. As criminal investigators continue to examine BP's March 2 spill in Alaska -- "the largest ever on the North Slope" -- where "an estimated 201,000 gallons, or 4,786 barrels, of oil [dirtied] nearly two acres of tundra," the Wall Street Journal reports that BP has discovered another pipeline break on the North Slope caused by corrosion. "We are at the point where there is so much damage to the lines from corrosion, we don't know where another leak will occur," said Marc Kovac, a BP worker and steward of the United Steelworkers of America local at Prudhoe Bay. A 2005 safety audit obtained by the Financial Times shows that BP "deferred maintenance and delayed repairs to the extent that staffers concluded equipment was in a 'dangerous condition.'" BP remains under investigation for a 2005 explosion at a Texas City refinery that killed 15 people and injured an estimated 500.