Small businesses seek relief on fuel

Requests include price controls

WASHINGTON -- As gasoline prices reached a record high Wednesday, Congress was told that more small businesses will be forced to declare bankruptcy unless the government regulates the price of gas.

Witnesses at a House Small Business Committee hearing called for government price controls and said it is unfair for energy companies to make huge profits and receive tax breaks while consumers suffer.

The hearing took place as the national average price of a gallon of regular unleaded gas rose 1.2 cents to a record $3.34 a gallon -- 55 cents higher than a year ago -- according to a survey by AAA and the Oil Price Information Service.

Also, crude oil for May delivery rose $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange after a government report showed the nation's oil supplies fell by a surprising 3.2 million barrels last week.

The small-business owners told the congressional panel that high gas prices already are forcing some businesses to downsize and eliminate benefits traditionally offered to employees.

"We are considering reducing our contributions to our employees' retirement accounts, increasing the amount that employees must pay for their health insurance and reducing other employee benefits. These are painful, painful reductions," said Tim Williford, vice president of finance and administration for Southern Piping Co., a family business centered in Wilson and Raleigh.

"Historically, small businesses run thinner margins than do larger competitors. There are two simple choices to reverse declining profits or minimize losses: either cut costs or increase prices," said Vincent Orza, dean of the Meinders School of Business at Oklahoma City University.

Some witnesses urged that as a first step, the federal excise tax of $18.4 cents per gallon be suspended.

But Rep. Louis Gohmert, R-Texas, said, "I want to see gas prices go down, but if you eliminate the gas tax, then we get behind on road and infrastructure problems" because those revenues are used for highway construction by the federal and state governments.

A number of other short- and long-term solutions to high gasoline prices were offered at the hearing:

* More domestic drilling for oil. "It is ridiculous to put our own gas off-limits," Gohmert said. "China and Russia are competitors. We are going to have to use our own resources as well to keep up."

* Alternative energy sources. "Ethanol saved American consumers an estimated 10.3 cents per gallon at the retail pump in 2007 for a total savings of $6.8 billion," said John Urbanchuk, director at LECG, a global expert services consulting firm. "There is a need for short-term help, but there is also a long-term demand for expanding our supply of biofuels."

* Incentives for companies' use of gasoline-electric hybrid cars. "If hybrids were made more attractive, we'd consider it," said Gary Gilberti of Chesapeake Rehab Equipment. "As it is now, though, hybrids cost more than regular cars, so you end up paying more money upfront, which is when you need the relief."

* Fuel economy regulation. "The government could pass regulations for truck manufacturers to increase fuel mileage on trucks like they have for car manufacturers," Gaff said.