Dianne Feinstein: “I am as upset by the gasoline price spikes as anyone else. Price spikes have been worse in California than in any other…”

“I am as upset by the gasoline price spikes as anyone else. Price spikes have been worse in California than in any other State. Today, as I speak, though prices have recently started to come down a bit, they still average more than $2 per gallon in some parts of California. Having said that, I feel obliged to oppose S. 2285, despite understanding the sentiment behind it. The problem with S. 2285 is that there is no way to guarantee that a reduction in the federal gasoline tax will be passed on to consumers. Why is this? Because price is a function of supply and demand, not taxes. And right now, world oil markets are extremely tight, so prices are high. The way to relieve the pressure on the market is to boost supply and reduce demand. With regard to supply, fourteen nations sell oil to the U.S. under a cartel known as the Organization of Petroleum Exporting Countries, OPEC. Like any monopoly, OPEC controls the price of oil by limiting supply. Decreased production in non-OPEC countries like Venezuela, Mexico, and Norway has also contributed to the squeeze. Since OPEC is not bound by U.S. law, there are only a few things the U.S. can do to encourage the cartel to increase supply. The preferred alternative is diplomacy. Energy Secretary Bill Richardson has had some success on this front. OPEC ministers announced last month that the cartel would immediately increase supply by 1.7 million barrels a day.”