Capitol Hill In the Market for Gas Price Solutions

Summer driving season is just up the road, and lawmakers from both parties are polishing up their legislative vehicles to deal with gas prices that are zooming towards $4 a gallon.

The Republican-controlled House passed a bill Thursday to force Interior Secretary Ken Salazar to restart oil and gas lease sales off the coast of Virginia and the Gulf of Mexico. Leases in the Gulf were stalled after the Deepwater Horizon oil spill in April 2010. The Obama administration said in a statement that it intends to issue more permits in the Gulf by mid-2012.

Republicans also want to ease permitting restrictions for new oil refineries. They say that by increasing American oil production, the price of gas at the pump will come down.

"My colleagues across the aisle will say that expanding drilling will do nothing to lower gasoline prices," said House Natural Resources Chairman Doc Hastings, R-Wash. "The truth is that this will send a strong signal to the world markets that the U.S. is serious about producing our resources and bringing more production online."

Democrats argued that new leases would not bring down prices in the short term, as it can take months or even years to bring wells online.

While the oil may not flow immediately, Jim Noe, Executive Director of the Shallow Water Energy Security Coalition believes the measure would still have an impact.

"The commitment to drill will impact gas prices because the traders will be comforted by the fact that America will be a steady supply source," says Noe, "Even before the oil starts flowing thru the pipeline to your neighborhood gas station."

An alternative suggested by Democrats would release crude oil from the Strategic Petroleum Reserve (SPR) in order to tamp down on speculation in the oil markets.

"This is important, not only to increase supply, but also to send a clear message to speculators that they do not call the shots," said House Minority Leader Nancy Pelosi, D-Calif., at a news conference Thursday, "The price at the pump is affected by the harmful speculation of some. And again how we strategically use the Strategic Petroleum Reserve is going to be very important and probably one of the quickest ways to take down the price at the pump."

A similar measure used after a price spike caused by the 1991 Gulf War lowered the cost of a barrel of crude oil by 33 percent.

In addition to releasing oil from the SPR, Democrats also want to roll back tax credits given to large oil companies to produce domestically.

"If we were to end a big part of those subsidies, we could save $31 billion over 10 years," Pelosi said, "The Republicans say that Big Oil needs these subsidies as an incentive to drill. And yet for the first quarter of this year big five oil companies had profits of over $30 billion."

Though some Republicans, including House Speaker John Boehner, R-Ohio, had expressed a degree of openness to such a measure, an attempt to roll back the tax breaks failed on the House floor Thursday.

Noe believes that raising taxes on oil producers will not bring in the revenue that some expect. "It's a pure economics game for them. If they can produce oil cheaper somewhere else," he says, "They'll put it on a tanker and ship it to us."