WASHINGTON – An Energy Department analyst told a Senate committee Tuesday that,even though rising gas prices “may have turned a corner,” the public is unlikely to see drastic,long-term price cuts.
“Consumers should not expect retail prices to fall back to prices seen before the recent increases,” said Guy Caruso,an energy information administrator. “While prices could drop below $2 per gallon over the next couple of weeks,and may continue to fall thereafter,present market conditions do not provide a reason to expect prices to return to their level at the start of this year anytime soon.”
Caruso said the average price of a gallon of gas has fallen from $2.05 at the end of May to just under $2 and should continue to fall throughout the month.
Witnesses told the Energy and Natural Resources Committee that a combination of lower supplies from the Organization of Petroleum Exporting Countries and increasing demand from industrializing countries like China and Brazil have contributed to increasing oil prices reflected at gas pumps nationwide.
“This year,concerns such as limited excess crude oil production capability,instability in the Middle East,and less available excess refining capacity than in the past may be contributing to higher prices,” Caruso said.
Volatility in the Middle East and Saudi Arabian control of oil exports also create fluctuating oil prices,said John Kilduff,senior vice president of the Fimat Energy Risk Management Group,a global brokerage firm.
“The power to control oil prices has never been so concentrated or dependent upon a single country,” he said.
But Kilduff said the Saudis have been “stepping up to the plate,” and their increase in oil production helped drive down July oil futures prices.
Republicans on the committee used the hearing to call on the Senate to pass an energy bill that has stalled there after passing the House. The House voted for the bill again Tuesday.
A spokeswoman for the bill's sponsor,Sen. Pete Domenici,R-N.M.,said the bill likely won't come to a vote in the next few weeks because there are not enough votes to pass it,but the senator has not given up.
“There are some who say the bill is dead – I say they're dead wrong,” Domenici said during the hearing Tuesday.
Democrats in the Senate have continued to resist the energy bill,saying parts of it are too friendly to big business instead of consumers.
“In issue after issue,there are ways this administration can stand up for the consumer,and it takes a pass,” Sen. Ron Wyden,D-Ore.,said in an interview after the hearing.
Wyden argued that the bill would not help make gas more affordable for consumers and blamed profiteering in the oil industry for increasing prices. He distributed a report at the hearing that charged the Federal Trade Commission with inaction on “oil company mergers,refinery closures and anti-competitive gasoline marketing practices.”
As an alternative to the stalled energy bill,Wyden said he would like to see the government hold off on filling the strategic oil reserve to increase supplies available to the public and take bolder action to promote renewable energy and conservation.
In a statement,Domenici said the bill “is the best solution at hand. It addresses our oil supply,gas supply,electricity challenges,our shared desire to protect our environment and our commitment to conserve more energy.”