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Washington Needs Focus To Lower Gasoline,
Oil Prices; NCPA Scholar Also Says
Scapegoating Needs to End

With gasoline prices still hovering below the inflation-adjusted record high of $3.21 per gallon (1981), NCPA E-Team Adjunct Scholar Kenneth P. Green says Congress and the Bush Administration need to focus on market solutions in order to bring down oil and gasoline prices.

"Instead of wasting time and causing speculative distortions in the market for gasoline, Congress and the Bush Administration should focus on removing impediments to supply and production," Green said. "Many if not most of the actions being taken are raising the cost of energy, not lowering it."

Green, also a visiting fellow at AEI, points out in an NCPA brief analysis released today that the primary reason for high oil and gasoline prices is simple-supply disruptions and the demand for oil (see: ), although moratoria on exploration and production, boutique fuel requirements, the recent mandate for ethanol additives and a lack of new refineries also contribute heavily to high energy prices.

"The causes of supply disruptions are obvious, but when coupled with growth in developing economies, such as China and India, and inadequate investments to meet growing demand, higher prices are the result," Green said.

There are a number of steps that Congress and the Administration could take that would relieve both short- and long-term pressure on oil and gasoline prices, according to the brief analysis:

-- Open the Arctic National Wildlife Refuge (ANWR) to development.

-- Facilitate exploration and development of offshore oil reserves.

-- Permanently lift federal boutique fuel requirements.

-- Terminate the ethanol mandate and tariffs.

-- Reduce regulatory barriers to building and expanding refineries.

"Congress and the Administration should focus on increasing the supply of oil," Green said. "All the talk about addiction to oil, attacking Iran, windfall profits taxes, price gouging, executive compensation and alternative fuels won't lower the price of gasoline." Green said.

The NCPA is an internationally known nonprofit, nonpartisan research institute with offices in Dallas and Washington, D. C. that advocates private solutions to public policy problems. We depend on the contributions of individuals, corporations and foundations that share our mission. The NCPA accepts no government grants.

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