Johnson says new bill would lower gas prices over long haul

By Steve Miller, Journal staff | Thursday, May 08, 2008

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Sen. Tim Johnson, D-S.D., is co-sponsoring a bill that he says would bring gas prices down.

He said the bill introduced by Democrats in the Senate would:

* Increase federal oversight of the oil and gas industry to try to prevent market speculation that he said is helping to drive up gas prices.

* Call for the Department of Energy to stop buying oil for the Strategic Petroleum Reserve, which he said is 97 percent full. "Taking barrels of oil off the market tightens up supplies and drives up prices. This measure will provide modest and short-term relief at the pump," he said.

* Permit the Justice Department to bring action against foreign states for illicit practices in setting the price and limiting production of oil.

* Imposes a windfall profits tax on the large oil companies if they do not invest a certain portion of their record profits to expand their production capacity. Johnson said that so far, the oil companies have not put their record profits into more exploration and production but have purchased stocks and returned record dividends to stockholders.

"I believe these policies, if enacted, will over time lower prices and smooth out energy markets," Johnson told reporters in a conference call.

But, he said: "There is no magic bullet that will produce lower prices immediately. For example, the weak dollar is partly to blame for higher oil prices."

Also on Wednesday, Johnson, along with Sen. Charles Grassley, R-Iowa, urged the Environmental Protection Agency to not waive the renewable-fuels standard in the 2007 energy law that requires increases in ethanol production.

Waiving the requirement, which is being sought by more than 20 Republican senators, would result in a 50-cent increase in the price of gasoline, Johnson said.

"Removing 5 billion gallons of ethanol in 2008 is exactly the wrong step to take when gasoline is already at record high levels," he said.

Johnson said he doesn't favor drilling in the Arctic National Wildlife Refuge, which he said has a unique ecosystem and doesn't contain a huge amount of oil, but he favors increasing production in the Gulf of Mexico. He said the U.S., including the refuge, has only 3 percent of the world's petroleum reserves.

Johnson said gasoline and diesel prices are hurting consumers and the economy. "At the same time, gas-company profits are out of control."

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com