Expect Gas Prices to Fall…A Little

Gasoline prices should shortly return to pre-Katrina levels, but will continue to range around $2.50 a gallon, predict federal officials.

The average nationwide should “ease off” from more than $3 a gallon currently to about $2.60 a gallon before the end of the year and down to $2.40 a gallon in 2006, Guy Caruso, administrator of the Energy Information Administration, told a Senate Energy Committee hearing Tuesday.

Nine out of ten oil and natural gas platforms in the Gulf of Mexico suffered no significant long-term damage and three major pipelines from the Gulf area are nearing capacity flows again, federal officials said. The Department of Energy also began the sale of 30 million barrels of crude oil from the Strategic Petroleum Reserve.

Congressional leaders meanwhile are vowing retaliation against price gougers while also preparing to draw up a second energy bill, tackling issues like oil drilling off the coast of Florida and higher fuel-mileage standards that were not in the law signed by President Bush on Aug. 8.

Senate Energy Committee Chairman Pete Domenici, R-N.M., opened the hearing with a warning.

“Let me say to any oil company that is price gouging, at whatever level, they will find themselves in those witness chairs where they will be held accountable,” said Domenici.

Some Democrats charged price gouging already is going on, noting that retail prices have gone up faster than the wholesale price of a barrel of oil.

“The distrust is enormous. I hope somebody is watching,” said Sen. Dianne Feinstein, D-Calif.

Domenici said he doubts there is any conspiracy by big oil companies to raise prices but he does believe some individual retailers “are not very concerned about how they’re raising the price.”

Sen. Byron Dorgan, D-N.D., announced plans to introduce a windfall-profits tax on the oil industry that would include a rebate for consumers.

“This is a huge industry that is going to reap profits of about $80 billion on a windfall basis,” said Dorgan. “There’s a big difference in where the gain is and where the pain is.”

But House Majority Leader Tom Delay, R-Texas, said, “The worst thing we could do is increase taxes on the economy.”

Instead of a tax, the House would consider steps to produce oil from the Alaskan National Wildlife Refuge, oil shale in the West and coastal waters, said DeLay.

The Energy Committee’s ranking Democrat, Jeff Bingaman, D-N.M., is working on a package of bills that Senate Democrats plan to introduce this week, including possibly a mandate for higher fuel efficiency standards. Domenici agreed Congress should revisit the issue.

“Things that were not politically possible two months ago are still before us and still require answers,” said Domenici.

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