WASHINGTON, July 24 (UPI) -- U.S. consumers are paying all-time high prices to fill up their gas tank, but top U.S. industry officials, including the nation's premier oil lobbyist, blame much of the price spikes on certain laws they say are giving oil companies a bad rap.
Pump prices jumped to an average $3.105 a gallon across the nation over the past two weeks, according to the Lundberg Survey, clearing the $3.0117 record set last September.
For Edward Murphy, downstream general manger at the American Petroleum Institute, the state and federal governments have to shoulder some blame.
"We have a long history of picking the losers in public policy," said Murphy at a recent energy summit sponsored by the U.S. Chamber of Commerce.
Murphy was referring to the additive ethanol to gasoline, and federal and state government mandates for its use. Although ethanol wasn't the only sore spot of U.S. energy policy brought up at the summit, it was a frequent target.
Panelists for "The Energy Community: What is Needed to Ensure our Energy Security," included officials from the Dow Chemical Co., U.S. Steel Corp., Caterpillar Inc. and fertilizer-maker the Mosaic Co., all of who criticized a reliance on the country's foreign energy supply and policies they view make the United States less competitive.
Murphy said ethanol mandates, instead of the free-market approach, along with government prerogatives like gasoline price-gouging legislation, "exacerbate" the already high prices.
U.S. ethanol producers enjoy both tax subsidies and a tariff on imports, but the increased demand for ethanol now competes for corn with industries feeding humans and animals.
"The rush to ethanol is a competing demand to food and feeding from grain we produce in this country," said Fritz Corrigan, president and chief executive officer of Mosaic.
Ethanol is primarily made from corn, though a more sustainable and diverse feedstock is expected in the near future if enough research and development and adequate technological advances are gained.
MTBE, a more popular and less expensive alternative to ethanol, is being voluntarily phased out now amid fears of lawsuits from leaks into groundwater, and is banned by many states.
That alone has created more demand for ethanol, bolstered further by requirements in the Energy Policy Act of 2005 to double ethanol sales by 2012, according to a report by the Lundberg Survey, a market research company focused on the U.S. petroleum industry.
Ethanol has been pushed heavily as a way to lessen U.S. dependence on oil. Ethanol was first subsidized in 1978 and is currently empowered by the high prices and slow, but growing, commitment of automakers to create more vehicles that can run on E85 -- 85 percent ethanol and 15 percent gasoline.
In tandem with the Chamber's message, the moderator and panelists said prices would drop and energy security would be bolstered if domestic supply was increased.
"There's a lot of untapped energy in our own backyard," said William J. Rohner, vice president of Caterpillar Inc.'s electric power division, referring to oil and gas exploration off the U.S. Gulf Coast and in the Arctic National Wildlife Refuge.
He called for "policies that allow industry to really tap into those resources."
While environmental concerns have ensured neither has happened, the secretary of the Interior Department said he plans to visit the 2,000 acres he'd like to explore in Alaska, and Sen. Pete V. Domenici, R-N.M., chairman of the Energy and Natural Resources committee, last week introduced legislation to open up 8.3 million acres in the Gulf.
Panelists also called for more emphasis on making the most out of current energy sources and byproducts, like trapping and reusing methane from coal plants, as well as increasing nuclear power.
John Dearborn, global business vice president at Dow Chemical, said energy costs have forced his company to become more energy efficient, as well as lay off thousands of workers.
"In order for us to produce these products around the globe it requires enormous amounts of energy and electricity," he said. "Prices are jeopardizing our industry."
The top 21 oil companies, which the Department of Energy's data arm refers to as "major energy companies," reported $24.1 billion in net income in the first three months of 2006, 23 percent more than first quarter of 2005, the Energy Information Administration reported.
Exxon-Mobil alone broke U.S. corporate profit records last year with $36.13 billion, including $10.71 billion in the fourth quarter alone.
Those numbers don't necessarily sit well with consumers filling their tanks with $3 a gallon -- or higher -- gas.
Crude oil is trading at nearly $74 a barrel Monday, down from the almost $80 last week. Murphy and the panelists said gas prices are largely caused by international issues like global violence, not oil sector profits, and called on the business community to help clean up the muddy oil image.
"The hostility directed at the oil and gas industry...is more punitive than helpful," he said.
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