8News: Gas prices are almost $5 a gallon: Here’s what Virginia’s legislators are proposing

8NEWS, DEAN MIRSHAHI

Gas prices continue to surge across the country, with the average price for a gallon hitting close to $5 nationwide and Virginians paying an average of about $4.80 per gallon.

The national average for regular gas on June 9 was $4.97 a gallon and $4.79 in Virginia, according to AAA, nearly $2 more than the same point last year.

Gas prices were high before Russia invaded Ukraine, which has only compounded the issue, brought on by supply chain disruptions and an increase in demand as the world recovered from the COVID-19 pandemic.

“Gas prices have been increasing this year for a few reasons, particularly depending on which market you’re in,” Devin Gladden, manager for federal affairs at AAA National, told 8News on Thursday. “But the overarching issue has been the rising price of oil.”

Gladden said demand was outpacing supply after stay-at-home orders were lifted and people started to travel more, exacerbated by the fact that refineries had shuttered facilities and began letting go of employees.

He added that sanctions banning imports of Russian oil in the wake of its invasion of Ukraine tightened an already limited global supply. Gladden explained that demand typically increases in the summer as many people decide to take vacations.

Prices at the gas pump are rising in the U.S. — and across Europe — as inflation impacts the cost of other basic needs, including food and housing.

There have been efforts to relieve the pain at the pump for consumers, including President Joe Biden’s order to use a million barrels a day from the Strategic Petroleum Reserve, but elected representatives have pitched different plans to address the issue.

Virginia’s two U.S. senators weigh in on the crisis
Democratic U.S. Senators Tim Kaine and Mark Warner of Virginia addressed rising gas prices on Wednesday, each pointing to issues they believe are contributing to the problem and sharing the ways they believe Congress should respond.

Sens. Kaine and Warner called for more transparency from oil companies who they say have made record profits but haven’t increased production, saying that Congress should hold them accountable if there’s evidence of price gouging.

“The question, and I’m not normally a business basher, but I do think if you look back over the last couple of years when the global price of oil was $20, $30, $40 higher than it is today, yet gasoline prices didn’t get to these same new record heights,” Warner told 8News. “I think all Americans ought to ask the question, if oil was up $160, $170 a barrel a few years back but it didn’t get close to $5 a gallon gas prices, what has changed?”

The U.S. House approved a price-gouging bill in May allowing Biden to declare an energy emergency, a move that would make it illegal to increase prices on gas and fuel excessively or in any way seen as exploitative. The legislation also gives the Federal Trade Commission the ability to punish companies that price gouge.

The measure, which appears unlikely to get through the U.S. Senate, was prompted, in part, by the top oil companies reporting more than $40 billion in profits in the first quarter of the year as gas prices increased.

Sen. Kaine said the record gas prices across the country and in Europe make the case for renewable energy, adding that Virginia has moved towards offshore wind and hydropower.

“The way to bring energy costs down is to really embrace innovation on the alternative energy side and Virginia is doing that,” Kaine said.

But he noted that it is a long-term goal. In the short term, Kaine says Congress should vote on legislation to oversee and prevent possible incidents of price gouging.

“As you look at the profitability of the big five energy companies, at the same time as people are suffering, they are doing amazingly well,” Kaine said.

Sen. Kaine said he would also back a windfall profits tax to take excess profits from oil companies to give to consumers.

“We’re not taxing it to grow the federal budget, I think we should tax these excess profits of oil companies and put the dollars right back into the hands of people paying at the pump,” Kaine said Wednesday.

He added that he expects the Senate to vote on the proposals soon, but acknowledged the Republican opposition in the chamber.

“Is this realistic? We’re going to have a vote on it soon. Again, I would expect that Democrats would uniformly be supportive of these efforts,” Kaine explained. “Whether or not we can get 10 Republican votes in the Senate or not, I don’t know but we’ll have a vote soon I hope and all can declare where they are on strategies to reduce the costs that consumers are facing right now.”

Sen. Warner said he also feels increasing American production of natural gas, with restrictions on methane emissions, would bring down energy prices and help the U.S. provide Europe “with a more secure supply of energy than relying on Russian gas and oil.”

Warner pointed to climate change, specifically CO2 emissions, saying that getting more countries to turn towards natural gas “as a transition fuel” ahead of using more solar, wind and nuclear power, would “go straight at the heart” of global energy prices.

Reps. Spanberger and Wittman share where they stand
Rep. Abigail Spanberger (D-Va.) told 8News she supports pushing for increasing U.S. oil production, saying that companies have not utilized permits they have been granted and should be pressed to start drilling.

“Most importantly, there’s currently thousands of unused permits that oil companies have that they are not drilling on,” Rep. Spanberger said. “And these are permits that are not only permits that are held but all of the regulatory hurdles have been jumped over. They are fully permitted, they are fully in compliance but oil companies are choosing not to drill.”

President Biden made a similar point during his appearance on “Jimmy Kimmel Live” on Wednesday, saying there are 9,000 drilling sites for companies to use by they’re not doing it “because they make more money not drilling and buying back their own stock.”

Spanberger said the U.S. House will take up legislation to strengthen the U.S.’s supply of biofuels and to make higher ethanol blends available across the country, sharing that she believes it would help reduce gas prices, and decrease the dependency on foreign oil and help mitigate supply shocks.

Spanberger expressed concern over the capacity for refining crude oil, saying it has declined since refineries closed operations when demand fell sharply during the onset of the pandemic.

“Even if we were to increase production astronomically here in the United States, our refinery capacity is not where it needs to be. We need to ensure that we’re not having volumes of crude oil just building up that can’t then be refined into gasoline or into diesel.”

Spanberger said she has co-led a push to have Saudi Arabia and the United Arab Emirates to “live up to their commitments” to the U.S. to begin pumping more petroleum into the global energy market.

Both Rep. Spanberger and Sen. Kaine spoke about the Biden administration’s decision to release oil from the Strategic Petroleum Reserve, saying they feel it’s been helpful and adding that they will urge the White House to continue the effort.

Rep. Rob Wittman (R-Va.) agreed that more can be done to expand production in the country, telling 8News that he’s hearing from constituents who rely on fuel on a daily basis. But he and other Republicans have questioned whether there is an evidence showing price gouging from oil companies.

“I’ve never seen so many people impacted,” Wittman said Wednesday. “I think there are things that we are doing but we need to push to open up U.S. energy production. No permits are being developed, companies are not drilling new wells.”

But Wittman criticized the Biden administration for halting the Keystone XL pipeline, arguing that it could help and would help diminish the reliance on foreign oil. The pipeline was not close to being finished when Biden revoked its permit, Gladden with AAA noted, and would not have contributed enough to the global supply to impact gas prices.

Wittman also called out plans to seek assistance from Saudi Arabia, saying instead that the U.S. should open up conversations with Mexico on addressing the supply issue.

“No plan is going to be immediate, that’s not going to happen with anything you do, but it’s a simple supply and demand issue,” Wittman said, adding that with the price of oil still high, the cost of gas is unlikely to dip soon.

“But if you assess it long term, providing additional supply will absolutely move prices downward,” Wittman told 8News. “If you don’t do that, nothing in the long term will help and prices will continue to increase.”

The offices of Reps. Bob Good (R-Va.) and Donald McEachin (D-Va.) refused interview requests for this story. Rep. McEachin has proposed legislation to give consumers $500 rebates by repealing several fossil fuel subsidies for oil companies.

A global solution for a global problem
Whether any of these plans will lead to lower prices at the pump in the short term or long term is still unclear. Gladden with AAA National said that the efforts to help lower costs won’t necessarily result in changes, saying that the issue boils down to supply and demand.

“We’re dealing with a global phenomenon. So, a global problem requires a global solution,” he said. “Because the issue continues to be that oil demand is rising but supply remains tight until more oil is put into the market to help reduce demand, prices are likely going to remain volatile and increase.”

He said production has increased and predicted it would in the summer and winter in the U.S. and across the globe, but it has not been enough to meet demand. Gladden added that emergency oil being released from reserves has dwindled and need to be replenished.

“Unfortunately the solutions that we have seen deployed to date have not been able to withstand the global tide of rising oil prices,” Gladden said. “As long as that continues to be a problem, where the market thinks that demand is outpacing supply, prices will rise. So, solutions that are not focused on either helping to stabilize demand or increasing supply, won’t have the market impact that people are expecting.”