CHICAGO – At a Marathon gas station in Chicago’s south loop neighborhood, Gov. Rod R. Blagojevich today announced a comprehensive plan to help stem skyrocketing gas prices in Illinois. His plan involves a combination of action at both the state and federal levels to guard against price gouging while reducing the country’s reliance on unpredictable and expensive foreign oil supplies.
According to the latest report from the federal Energy Information Administration, the national average retail price for regular gasoline climbed to $1.78 per gallon in early April, 15 cents higher than at the same time one year ago. Philip K. Verleger, Jr., an economists from the Institute for International Economics, estimates that every one-cent rise in the price of gasoline over a year costs Americans one billion dollars.
“When gas prices get too high, everyone suffers. Drivers have to pay more to get where they’re going. Farmers have to pay more to run their tractors and combines. Truckers have to pay more to transport goods. And the chain-effect makes prices rise across the board. So it’s up to us to do everything we can to keep gasoline prices in check,” said the Governor.
Blagojevich is proposing legislation to protect consumers in Illinois from price gouging by unscrupulous gasoline dealers. The measure prohibits retailers and suppliers from using a state of emergency as an excuse to hike prices. Violators would face penalties of $1,000 for each sale that gouges consumers.
During today’s press conference, Blagojevich signed an executive order that charges the Department of Revenue, with the help of the Department of Agriculture and the EPA, with the responsibility of monitoring retail and wholesale gasoline prices in Illinois. In addition to watching out for unjustified price increases, the Department will also study zone pricing to see if price differences among geographic areas are caused by inappropriate collusion among retailers in the area, and whether single source distribution contracts that bind a retailer to one particular supplier lead to higher prices.
In order to avoid gasoline shortages in Illinois, which would impact retail prices, the Governor last week approved an emergency permit allowing a Conoco Phillips refinery in the Metro East to temporarily use a nearby vacant refining unit. As a result, the company did not have to shutdown a unit that produces specially-blended gasoline sold in metropolitan Chicago and St. Louis, and will continue to be able to process up to 310,000 barrels of crude oil a day without interruption. The Governor also announced a $475,000 grant over three years to the Marathon refinery in Robinson to provide worker training to help increase productivity and efficiency.
On the federal level, Governor Blagojevich is pushing Congress and the Bush administration to take steps to reduce reliance on foreign oil supplies. He noted that just last month OPEC announced plans to cut production by 4 percent, which is certain to lead to higher American gasoline prices this summer.
Blagojevich, who chairs the Governors’ Ethanol Coalition, is pushing for inclusion of two provisions in the federal energy bill that would increase the use of ethanol – a corn-based renewable fuel additive that burns cleaner than gasoline and is made domestically. By creating a federal Renewable Fuel Standard, ethanol consumption would be increased from 2.5 billion gallons a year now to 5 billion gallons a year in 2012.
Blagojevich also wants Congress and the President to change the calculation used to determine how much federal fuel tax money goes back to states. Right now, states like Illinois that use ethanol in their motor fuel only get funds based on their gasoline consumption. By basing the calculation on total fuel consumed – including ethanol – Illinois would bring in an additional $1.9 billion in highway trust fund dollars over six years.
The Governor acknowledged that a key tool in the battle to keep gasoline prices low is to reduce demand. Today he signed an executive order requiring state employees to use renewable fuels – like biodiesel and E-85 – in state-owned vehicles whenever practical.
In addition, Blagojevich announced the state would aggressively promote a program that encourages state employees to use mass transit by allowing them to use pre-tax earnings to pay for commuting costs.
“If you take a bus or a train to work, you can pay for your ticket without paying taxes on the money you spend. With those savings, since you’re not paying taxes on that money, you can cut up to 40% percent off your commuting costs,” said Blagojevich, adding, “This benefit isn’t just for people in Chicago. If you live in Springfield, Decatur, Rockford, the Quad Cities, or any community with municipal bus service, you can get this tax saving on your bus pass, too.”
The state will also launch a toll-free phone number to provide private employers with information about how to set up similar programs for their employees. While employees save on commuting costs, employers can save on payroll taxes. Interested state employees and private employers can call 1-866-637-9801 for more information.
“Ultimately, if we truly want to bring down gas prices, we’re going to have to stop relying on OPEC, stop using more gasoline than we have to, and start using more resources like ethanol, that are abundant here in Illinois, and in America,” said Blagojevich. “We have the ability to bring down gas prices. But it takes will. It takes change. It takes ideas. We’re going to take every step we can here in Illinois. And we think that will make a difference. If our leaders in Washington will work with us, we can bring down gas prices in Illinois, and all across America.”