Governing gas: legislation’s role

“Gas is like bread and milk,” LSA junior Garrison Paige said. “People still need to get to work and school. I don’t have a reason yet to change my habits.”

Recognizing that Michigan residents are dependent on oil, Gov. Jennifer Granholm has developed solutions to ease the economic burden high gas prices are imposing on the state.

Granholm’s main solution to curb gas prices is encouraging a cap on oil company profits. She also signed a bill May 3 that penalizes gas-station owners who price gouge by altering pumps to dispense less fuel than indicated on the gauge.

Although some University students are ambivalent, 272,858 Michigan residents signed Granholm’s online petition to prompt President George W. Bush to put a cap on oil profits.

Gov. Granholm created the petition in response to oilmakers earning record prices because gas prices may be regulated on the federal level.

“Paying nearly $3 per gallon while oil companies enjoy $10 billion in tax breaks and rake in billions more in profits is just plain wrong,” the governor said in a statement.

The governor sent her month-long petition to the White House Thursday.

“I think it’s important to communicate to President Bush the problems we’re having at the state level,” said State Senator Liz Brater (D-Ann Arbor), who has backed much of the governor’s gas legislation.

As the 2006 gubernatorial election quickly approaches, Granholm faces competition and criticism from Republican candidate Dick DeVos, who has proposed his own ideas for helping Michigan residents handle the costs of gas.

“The petition that you send to Washington does not make one bit of difference,” DeVos’s Communications Director John Truscott said. “It’s a publicity stunt. There’s no meat behind it.”

Some students were also doubtful about the petition.

“It looks good at face value,” said Engineering senior Daniel Nemirovsky. “(A cap on profits) can have unforeseen consequences on other industries.”

Nemirovsky said a change in the executive administration might be the solution to high gas prices.

Truscott said DeVos proposes suspending the state sales tax on gas after the first $1.96 of each gallon of gasoline – saving consumers about six cents per gallon.

But Granholm’s campaign spokesman Chris DeWitt said this proposal would cut a substantial amount of funding to public education and police and fire programs, supported in part by state tax revenue.

Walter McManus, research scientist director at the University’s Transportation Research Institute, said the governor’s idea that Bush should cap oil profits could have negative consequences in the long run.

McManus said oil companies are investing in research for alternative fuels and new oil reserves.

But if Bush puts a cap on oil profits, he will reduce the incentive to find new oil because the expected profit from such an endeavor would decrease substantially, McManus said.

He added that the supply of oil will be reduced and price increases will be unavoidable in the long run.

McManus also explained the reason for a record in oil profits. Many oil companies bought stocks of oil years ago for much less than they are worth now, he said. By the time they sell the oil, the companies make a considerable profit.

Under DeVos’s plan, McManus said consumers will save an average of $36 a year. They can save more by driving more “smoothly” – not accelerating or braking rapidly and driving at a constant speed. Based on his research, this could save consumers about $133 a year.

At the local level, Mayor John Hieftje proposed ideas to encourage alternative modes of transportation, such as creating a rail transport system that travels to Detroit, Dearborn, the Metropolitan airport, Ypsilanti and Ann Arbor.