U.S. states probe high gas prices, eye tax cuts

By Karen Pierog

CHICAGO (Reuters) – U.S. states, reeling from skyrocketing
gasoline prices in the wake of Hurricane Katrina, have launched
probes into alleged profiteering and are mulling temporary
relief for drivers by suspending taxes.

Boosting the use of alternative fuels like ethanol to
relieve gasoline supply worries is also being pushed by
officials in some states.

Responding to numerous consumer complaints about pump
prices jumping — sometimes within hours — investigators are
fanning out across several states.

California launched a probe of gas price hikes and state
Attorney General Bill Lockyer said he will subpoena refiners’
records and threatened to prosecute profiteers.

The AAA Motor Club reported the national average price for
regular unleaded gas was $2.86 a gallon on Friday, up from
$2.70 on Thursday, although prices in many urban areas soared
well above $3.

The hurricane knocked out oil refiners in Louisiana and
Mississippi, cutting 42 million gallons a day or 10 percent of
the nation’s normal consumption.

The federal government responded by releasing 900,000
barrels a day of stockpiled crude, temporarily relaxed fuel
standards and asked for emergency international supplies —
moves aimed at mitigating price run-ups and potential fuel
shortages.

“We will not stand by and let our consumers be exploited by
profiteers looking to cash in on Hurricane Katrina,” said
acting New Jersey Gov. Richard Codey in a statement.

He warned that his state will take action if cases of price
fixing or other illegal activity push prices “off the chart.”

Ohio Attorney General Jim Petro put the state’s petroleum
council, gasoline marketers and convenience stores on notice,
asking them to justify price hikes.

“I encourage anyone who believes a station is charging
excessive prices to file a complaint with our office,” Petro
said, adding that his office got hundreds of complaints this
week.

STATE GAS TAX CUT URGED

Hawaii on Thursday became the first state to impose limits
on gas prices since the energy crisis of the 1970s. The state
will set weekly caps on wholesale gasoline prices for different
regions of the islands.

Georgia Gov. Sonny Perdue on Friday signed an executive
order suspending the state’s 7.5 cent-per-gallon motor fuel tax
through the end of September. The move must be ratified by the
legislature.

In New York City, City Council Speaker Gifford Miller and
others asked Friday for state authority to set a flat, per
gallon tax rate to ease gas prices that have jumped over $3.50
per gallon.

New York and eight other states, including California,
Florida and Illinois, collect sales taxes on gasoline
purchases, giving them a potential revenue windfall as gas
prices escalate.

All 50 states collect excise taxes that can add anywhere
from 4 cents to 30 cents to the per-gallon cost.

Democrats in the Oklahoma legislature proposed suspending
the state’s gas tax for the rest of the year, saving drivers 17
cents per gallon, or $1 million a day.

Connecticut Gov. M. Jodi Rell has raised the possibility of
a temporary suspension of the gross receipts tax on gasoline.

Meanwhile, officials in agricultural states who advocate
greater use of corn-based ethanol and other non-fossil fuels
intensified their efforts to promote alternative fuels.

In Ohio, House Speaker Jon Husted said he will push
legislation for more widespread use of alternative fuels such
as biodiesel and ethanol.

Wisconsin Gov. Jim Doyle called on the legislature to pass
a bill ensuring gas sold in his state will contain 10 percent
ethanol.