American anger at gas prices fueled by rising household energy costs
Americans are spending 12 percent of their disposable income on energy costs – up from 7.7 percent in 2002, a new study says. Gas prices are the biggest part of the equation.
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In Maine, meanwhile, households forked over 16.6 percent of their disposable income for energy – a big chunk for costly heating oil – compared with 9 percent in 2003. That could have ramifications for Maine Sens. Susan Collins and Olympia Snowe, both Republicans, says Mr. Book. Similarly, Sen. Lindsey Graham (R) of South Carolina could face similar pressures given that his state's households pay 15 percent of their disposable income for energy.Skip to next paragraph
In Louisiana, an oil state where households spend about 11.6 percent of their income on energy, ClearView's analysis shows, there is a bit less pressure on Sen. Mary Landrieu (D) to chop tax breaks for oil companies. Filling up her Chevrolet Suburban makes her angry, but cutting subsidies to the five biggest US oil companies "is not going to lower gas prices by one penny," she told Platt's Energy Week.
She was joined by industry organizations making the same case.
“Making baseless allegations about America’s oil producers and refiners in an attempt to improve candidates’ political poll numbers does nothing to improve America’s energy security or make gasoline more affordable for America’s families, farmers, and truckers," Charles Drevna, president of the National Petrochemical & Refiners Association, said in a statement. "Instead of playing politics with America’s energy needs, our elected officials need to look at basic economics and acknowledge that the cost of oil and gasoline is set by the free market."
Energy issues on the boil
Congress could feel pressure to act in other ways, too. Annual household gasoline expenditures have risen from less than $2,000 in 2009 to more than $3,000 this year in some areas, according to the Consumer Federation of America. A strong majority of Americans – Republicans, Democrats, and independents – want better fuel efficiency from their cars, according to a recent CFA poll.
“Pain at the pump, along with the country’s oil import dependence, has produced a growing consensus that the federal government should substantially increase fuel economy standards," says Mark Cooper, CFA's research director.
In short, the fundamental economics of pump prices look certain to keep the issue top of mind for many Americans – and therefore in Congress's crosshairs, says ClearView's Book.
Indeed, by many typical measures, gas prices should be lower: US gasoline consumption is weak, there is an oversupply of West Texas Intermediate crude, and US refineries are operating well below capacity. Yet prices have jumped anyway on the strength of inefficiencies in the global refining system, soaring Chinese demand, supply interruptions in Libya, and US currency-exchange issues.
Tuesday's bill taking on Big Oil tax breaks was "just the start of the process," says Book. "Certainly any decline [in gas prices] has potential to lessen political pressure. But the discontent doesn't go away even if prices pull back a bit."