Noem: It’s time for action on gas prices

Talk about it

U.S. Rep. Kristi Noem, R-S.D., said Monday in Mitchell that more oil exploration and development is needed, and federal regulations should be eased to encourage production.

She listened to comments and complaints about high fuel prices during an afternoon meeting at Cabela’s.

Noem, a freshman congresswoman from rural Hamlin County who is seeking a second term, said she came to Mitchell in order to have “a real casual conversation” with people and find out what they think should be done.

Noem said she favors increased production in the United States.

“We really haven’t done much to tap into the resources we have,” she said, in part because of government red tape. She said 85 percent of the offshore oil resources are not being developed.

“We’ve had a tough time getting permits approved,” Noem said. “The regulations are stifling what the businesses are able to do.”

She said small oil companies need improved access to oil. “I think we need a level playing field,” Noem said.

But she said tax increases for big oil companies aren’t the answer, since they would just be passed along to consumers. And they’re paying plenty right now.

In South Dakota, the average price for a gallon of gas rose 6.1 cents per gallon in the past week and 28.3 cents in a month, averaging $3.63 a gallon Sunday. That’s 15.1 cents higher than it was March 12, 2011. The national average is $3.75 a gallon. Each cent increase is the equivalent of pulling $1 billion out of the economy, Noem said she has read. A 50-cent increase could actually drain $70 billion from the economy, she said.

“Everybody is very concerned about the trend we have,” she said. “What could we do to maybe bring some relief to everybody?”

South Dakota’s agriculture industry has enjoyed boom times, Noem said, but that could be slowed by high transportation costs.

The Cabela’s conference room was packed with about 50 people for the meeting, with every chair taken. Attendees included State Sen. Mike Vehle, R-Mitchell; state Rep. Lance Carson, R-Mitchell; state Rep. Tona Rozum, R-Mitchell; Mitchell Mayor Lou Sebert; Mitchell School District Superintendent Joe Graves; Davison County Commissioner John Claggett; several area county commissioners; and representatives of numerous local companies.

Claggett said 45 percent of the Mitchell workforce comes from outside the community. As fuel prices increase, they are directly hit, he said.

“That’s going to be a direct impact for us,” Claggett said.

Sebert said it makes it difficult for local governments to budget properly. “It seems we’re always constantly supplementing fuel costs,” he said. “We’re fortunate we have a pretty good reserve in the city. Not every city has that.”

Sebert said the lack of price stability is especially bothersome. He said prices drop 10 cents and then go back up 20 cents. It’s also difficult on employees, Sebert said, since those who live in rural areas have to spend more money commuting.

Vehle said Mitchell is partly dependent on tourism, with the Corn Palace and a large number of motels, so high gas prices mean a drop in the local economy.

Hannah Walters, director of the Mitchell Convention & Visitors Bureau, seconded that concern. She said it wasn’t just the extra $75 it would cost to drive to a destination, but the $500 or so less money families would have to spend during the year due to high gas prices.

“The less money they have to spend on vacation, it’s going to have an impact,” Walters said.

Vehle said coal should be used to create electricity, since it is “the cheapest way to make power.” Several people agreed with that.

Noem asked how people felt about the proposed Keystone XL pipeline, which has been in the middle of a battle between opposing sides for more than a year. Most people in the room favored building the pipeline, which would pass through western South Dakota.

The pipeline, which would carry heavy crude oil from Canada’s Alberta province to production facilities along the Gulf Coast, could not be completed until 2014 at the earliest.

She said while she hadn’t discussed the pipeline with President Obama, she feels environmentalists are working to block the pipeline from being built.

She said more oil in the marketplace is better for the country and may serve to lower prices. However, numerous recently published reports have said that may not be the case.

If built, the pipeline would move 1.1 million barrels per day to the Gulf Coast, where there is a need for oil to be refined. There is a glut of crude oil in the Midwest, although producers are not passing that savings along to consumers.

Noem said she realizes the crude oil might not end up in the American market, but said more oil in the world has to help at some point.

Noem also said the pipeline could bring property taxes to counties and schools.

“We can’t afford to delay this another three or four years and think this oil is still going to be there for us,” she said.

Paul Muth, of Muth Electric, said the pipeline would be a valuable asset for local governments. Muth said he heard of a school district that will receive $500,000 in taxes from a pumping station located within in its boundaries.

Other people asked why big oil companies get tax credits and why they aren’t preparing their plants to deal with the oil that would come from Canada.

Don Meyers, co-owner of Meyers Oil Co., said the money isn’t ending up in the pockets of the people who sell the gas to drivers. “Local businesses are struggling,” he said.

Meyers said most convenience stores make 10 to 13 cents profit per gallon, with 10 cents being common. Meanwhile, state and local governments collect 42.6 cents a gallon in taxes. Large oil companies are getting out of the convenience

Chris Huber/Republic U.S. Rep. Kristi Noem, R-S.D., talks about rising gas prices Monday afternoon in a conference room at Cabela’s in Mitchell.

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