2005-09-14 / Editorials

Editorial

The effects of Hurricane Katrina aren’t confined to the Gulf Coast. Most of the United States depends on oil and gas exploration, drilling and refining operations in the Gulf of Mexico and almost as soon as the storm surge from the Category 4 hurricane receded last week, gas prices escalated across the nation.

To a certain extent, the price hikes were understandable, and anticipated. However, at least half of the oil rigs in the Gulf of Mexico have returned to full production and a good part of the refineries where oil becomes gasoline and other petroleum products are back on line. Prices of petroleum products, including gasoline, should have started to pull back by now. They haven’t, as a look at gasoline prices at any service station will indicate.

State Attorney General Eliot Spitzer, like a number of other attorneys general, is giving the matter serious scrutiny, asking 65 gas stations across the state for information on gasoline prices. Investigators in the attorney general’s office are asking why prices have increased so much and if the price hikes have been warranted. The gas stations had until this past Monday to report what they're paying for fuel.

Federal legislators are also hearing from consumers about high gas prices and many are calling for the Federal Trade Commission to investigate possible price gouging. Other lawmakers in and outside New York have called for state and federal governments to suspend their taxes on gas. The New York state senate plans to return for a special session later this month to consider a rollback of the state gasoline tax. State taxes vary, but the federal government collects 18.4 cents for every gallon of gas sold. Rolling back both New York state and federal levies would save gas consumers about 28 cents a gallon.

We appreciate that oil companies and governmental agencies are not responsible for natural disasters such as Hurricane Katrina and that fossil fuel, like just about everything else on this planet, is subject to the laws of supply and demand. We also are very much aware that oil drillers and refiners suffered losses during and after the storm and in many cases must recoup those losses in order to stay in business and keep employees on the payroll, let alone make a profit. And yes, the costs sustained by oil companies getting their drilling rigs in the Gulf of Mexico and their refineries in the Gulf Coast states and elsewhere back on line have of necessity to be passed along, ultimately to the consumer.

However, in this kind of situation it seems to us that the consumer bears proportionately a heavier burden in the aftermath of catastrophes such as Katrina. Here in the tri-state area, consumer goods of every kind are brought in by truck. Rising fuel costs mean higher prices for everything from cabbages to shoes. Many people are, commendably, electing to leave their cars at home and use public transportation, but buses are still powered by internal combustion engines. The subways of this city run on electricity generated mostly at fossil fuel-burning plants. Many of the boilers that heat houses and apartment buildings, schools, offices and stores burn oil. If landlords have to pay more for fuel oil, so, too, will their tenants, be they residential or commercial. Rising oil prices will affect everyone.

Rolling back the state gasoline tax, at least temporarily, will relieve consumers of some of the burden, however slightly. The rollbacks need not be permanent. Governments need revenues in order to function, we know. But lifting some of the burden from the consumer, however short the term of such relief, will enable consumers to buy goods and services and bring down prices. A storm-battered economy will get a badly needed shot in the arm.

Return to top

Copyright 1999-2013 The Service Advertising Group, Inc. All rights reserved.