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Tuesday, April 25, 2006


Bush eases environmental rules on gasoline
Here's a list of what the article says he does and my reactions:

* President Bush on Tuesday ordered a temporary suspension of environmental rules for gasoline, making it easier for refiners to meet demand and possibly dampen prices at the pump. [...] Easing the environment rules will allow refiners greater flexibility in providing oil supplies since they will not have to use certain additives such as ethanol to meet clean air standards. I wonder if this will have the effect he hopes for. After all, since you can't mix ethanol-based gas and MTBE due to some chemical issues I don't completely understand, it won't help those who have already begun cleaning their tanks and will make their gasoline more expensive compared to those who haven't begun making the switch. They'll either have to use the MTBE stuff and make the switch again or lose business by charging for more expensive ethanol-based stuff.
* He also halted for the summer the purchase of crude oil for the government's emergency reserve.I have no idea if this will make a difference, but the article said likely not. It seems mostly symbolic.
* He urged Congress to take back some of the billions of dollars in tax incentives it gave energy companies, saying that with record profits, they don't need the breaks. This is good, although it seems to say that if they weren't having record profits, the subsidies would be okay. We shouldn't be subsidizing these companies anyway.
* He urged lawmakers to expand tax breaks for the purchase of fuel-efficient hybrid automobiles. I don't like distorting the marketplace like this. I'm all for conservation, but I don't like government mandates.
* Instead, he called for increased conservation, an expansion of domestic production and increased use of alternative fuels like ethanol. Right track here.
* The administration also contacted all 50 state attorneys general to offer technical assistance to urge them to investigate possible illegal price manipulation within their jurisdictions. Ugh. Economic illiteracy. What really concerns me is that some attorney generals will find manipulation even if none exists. Even if the companies are found not guilty, any trials would just further inflame the political mood. This isn't a good idea. There isn't anywhere near dominance of the gasoline market to fix prices. The temptation to undercut the "cartel" and make more profits by charging a lower price would be too strong. To the extent that monopolies do exist in the country, it's the government supported monopolies, we call "utilities." If they want to investigate price-fixing look at those.

It's amixed-bag of propodals, but I'll give it a general thumb's up.

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