Fuels

No Federal Gas Tax Hike

Senate Energy chair says increase unlikely; drilling ban won't be reinstated
WASHINGTON -- The new Congress probably will not approve legislation to raise the federal tax on gasoline, the chairman of the Senate Energy Committee said on Monday. Senator Jeff Bingaman (D-N.M.) said he was aware of arguments that a "variable tax" should be put on U.S. gasoline to prevent falling pump prices from encouraging Americans to drive more while making alternative fuels less attractive, reported Reuters.

Such a tax hike "would be very tough to pass," Bingaman said at the Center for Strategic & International Studies. "I don't think something like that has [image-nocss] much prospect of being enacted, in my honest opinion."

Americans pay an 18.4-cent federal tax on each gallon of gasoline they buy, plus an extra 29 cents on average in combined state and local taxes.

As the cost of gasoline has declined to half its record $4.11 a gallon set in July, some energy experts have said the United States should levy a tax. These experts point to Europe, where the gasoline tax is much higher, to reduce reliance on imported petroleum. The European tax formula keeps gasoline costs high even when crude oil prices fall.

The average cost of gasoline has dropped below $2 a gallon in 17 U.S. states, raising concerns among some that many Americans will return to driving gas-guzzling sport utility vehicles, hindering efforts to reduce reliance on oil imports.

Meanwhile, House Democrats have no interest in restoring the broad ban on oil and gas development off the Atlantic and Pacific coasts, but will seek to "delineate areas available for drilling" when Congress returns next year, the second-ranking Democrat in the House said Tuesday. Majority Leader Steny Hoyer (D-Md.) made clear in remarks at the National Press Club that some limits on offshore drilling will be pursued, said a report by the Associated Press.

Congress in October ended a quarter-century ban on drilling in 85% of the nation's offshore federal waters from New England to the Pacific Northwest.

"Nobody is suggesting that we return to the same position [of an across-the-board ban]," said Hoyer, saying that no proposals are being made to reinstate the 26-year-old ban on drilling in Atlantic and Pacific federal waters. But Hoyer said that "there will be real discussion on the parameters on which drilling will be pursued."

President-elect Barack Obama has said he would support some limited expansion of offshore oil and natural gas development if states adjacent to that offshore drilling approve and if it is part of a broader energy plan aimed at moving the country toward greater use of alternative, nonfossil energy sources and greater efficiency.

Currently, virtually all Outer Continental Shelf drilling occurs in the central and western Gulf of Mexico.

While the broad drilling bans, which were first enacted by Congress in 1981, may be history, lawmakers must still work out details about such issues as revenue sharing with states and whether some environmentally or economically sensitive areas should be protected from energy companies. Without a system of sharing federal royalties with states, it is unlikely many states-if any-would endorse drilling off their coasts.

In September, the House passed legislation to allow offshore drilling along the full length of both the Atlantic and Pacific coasts, but preserved a 50-mile wide coastal buffer that remained off limits. The bill died in the Senate; however, the broad drilling ban was allowed to expire in October. The Interior Department estimates those waters contain at least 18 billion barrels of oil, about half of it off the California coast.

"I think there will be efforts to look at further ways to delineate areas available for drilling," said Hoyer. He declined to say when the House might take up legislation to deal with climate change, although he said "there is a consensus" among Democrats and with the incoming Obama administration "that we must address that issue...in a decisive and effective way" to substantially cut heat-trapping greenhouse gases.

"We will work with the president-elect, Obama, when he becomes president, to determine the timing," said Hoyer.

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