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The House yesterday passed a bill that would make price gouging by gas stations and oil companies a federal crime as prices at the pump surpassed a 1981 record reached at the height of the Iranian oil crisis. The White House, which has threatened to veto the bill, warned the legislation amounts to price controls and would lead to gas shortages and lines like in the 1970s.
 
The cross over the threshold of $3.23 a gallon reported by GasBuddy.com equals the inflation-adjusted record high for gas prices and heralds a new era of high energy prices and scarcity of fuel as growing demand in China, India and the U.S. collides with scarce new sources of oil and sluggish increases in gasoline production worldwide. Economists say the House bill will not help to ease those shortages or bring down high prices.

Business groups said the bill would be difficult to enforce and would set a dangerous precedent by opening the floodgates to frivolous lawsuits, further driving away any hopes of increased energy production that would take the pressure off prices.

“This is a first step in addressing the outrageous prices we are seeing at the gas pump,” said bill sponsor Rep. Bart Stupak, Michigan Democrat. Prices in recent years have peaked at about the Memorial Day start of the summer driving season, but they could climb higher this year if hurricanes or conflicts in the Middle East or Nigeria disrupt supplies.

“This bill is all bark and no bite, and will do nothing to lower gas prices,” said House Minority Leader John A. Boehner, Ohio Republican. “No American likes paying high prices at the pump. … This bill could make the pain felt by consumers at the pump considerably worse.”

The supply pressures that have driven up gas prices this year eased somewhat yesterday as the Energy Information Administration reported an increase in output at U.S. refineries and a 1.5 million-barrel increase in gasoline stocks, which are about 7 percent below average for this time of year. That helped to reduce wholesale gas prices, though demand for gas remained strong, growing at a 1.2 percent pace.

In coming years, Americans face sharply higher prices for energy as they compete with burgeoning demand for gasoline to power cars in emerging giants such as China, India and Russia. A separate report from the energy agency Monday said energy demand worldwide will soar 57 percent by 2030. To keep pace with that demand, production of oil would have to grow more than 40 percent to 118 million barrels a day.

But because of dwindling reserves and production of petroleum, the report projects that other liquid fuels such as biodiesel and liquefied coal will meet about one-quarter of the increased demand. Economists say oil and gasoline prices will have to rise significantly higher for that to happen, since expensive technologies are needed to tap into the alternative fuel sources and make mass production possible.

The sobering outlook for energy resources was not discussed much yesterday as the House entertained a perennial favorite among lawmakers and the public: legislation enabling the Federal Trade Commission and Justice Department to impose on oil companies, traders and retail operators jail sentences and fines of up to $150 million a day for charging “unconscionably excessive” prices or taking “unfair advantage” of consumers.

The bill’s enforcement provisions would be triggered if the president declared an energy emergency such as might occur if hurricanes disabled Gulf Coast oil fields and refineries as they did in 2005 after Hurricanes Katrina and Rita. The bill could be enforced by state attorneys general and class-action lawsuits.

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Does this story remind anyone else of the California Enron scandal when power plants were shut down for routine maintenance to raise energy prices? 

BP Shuts 100,000 Barrels of Output in Prudhoe Bay for a ‘Few Days’ Due to Water Pipeline Leak

BP said Tuesday it will shut down 100,000 barrels, or one quarter, of its Alaskan oil production for a “few days” after discovering a water pipeline leak.
Analysts said the temporary loss of output at Prudhoe Bay should not have a dramatic impact on world oil markets, but with supplies already tight and crude futures trading near $66 a barrel, any snag in the industry tends to make energy traders jittery.

Light sweet crude for June delivery fell 32 cents to $65.95 a barrel in electronic trading on the New York Mercantile Exchange.

London-based BP said the leak was discovered Monday in a 12-inch pipe that collects water separated from the oil and gas it produces.

“We’re putting together inspection and repair plans to return the facility to normal operations,” BP spokesman Neil Chapman in Houston said.

Alaron Trading Corp. analyst Phil Flynn downplayed the significance of the event for U.S. energy consumers.

“It’s not that (this lost production) can’t be made up elsewhere in the world,” he said, “but we would like to get production here rather than elsewhere.”

U.S. refiners convert more than 15 million barrels a day of crude oil into gasoline, diesel and other liquid fuels — and about two-thirds of that oil comes from abroad. The country imports an additional 2.6.

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Toyota’s commitment to hybrid automobiles was on full display Thursday when it unveiled its most expensive gasoline-electric vehicle yet—the $124,000 luxury sedan Lexus LS.

Executives at Japan’s No. 1 automaker are fully convinced that hybrid cars are the way of the future. And they’re betting that growing consumer concern about the environment—and higher gas prices—will lure even wealthy buyers to the new model, which went on sale Thursday in Japan for 15 million yen and will arrive later elsewhere.

Executive Vice President Masatami Takimoto denied hybrids were “a transitional technology” that will be replaced by more advanced ecological technology in the future.

“As long as cars exist, the need for hybrid technology will remain,” Takimoto said.

Toyota Motor Corp., which introduced its first hybrid, the Prius, 10 years ago, sold about 300,000 hybrids worldwide last year, and it plans to sell a million hybrids a year sometime after 2010.

Although all the world’s automakers are working on hybrids, Japan’s No. 1 automaker has dozens of patents on the technology and has sold more hybrids than any other automaker.

The most common hybrids today switch between a gas engine and electric motor to deliver better mileage and reduce emissions that cause global warming.

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