Governor’s Veto Could Raise Cost Of Gas

Robert Kittle/News Channel 7
Published: June 13, 2008

One of Gov. Mark Sanford's vetoes could raise the cost of gasoline in South Carolina by five to eight cents a gallon.  Late Wednesday night, the governor vetoed a bill that deals with local gas distributors' ability to blend gasoline with ethanol.  Right now, some of them blend gas and ethanol themselves and get a federal tax credit.  That helps them keep prices down.  But the major oil companies want to stop selling S.C. distributors pure gasoline; they want to start selling only a gas/ethanol mix that's already blended.  That way, the big oil companies get the federal tax credit.

Michael Fields, executive director of the South Carolina Petroleum Marketers Association, says, "If the big oil companies monopolize this alternative fuel, you're going to see an increase in price.  Competition goes away, price goes up."  He says the price increase would be anywhere from 5 to 8 cents a gallon, possibly as much as 12 cents a gallon for premium. 

Because of the threat, state lawmakers passed a bill that would require oil companies to sell South Carolina distributors pure gasoline so they could continue to mix with it ethanol themselves.  But Governor Sanford vetoed the bill just before midnight Wednesday.

 In his veto message, he said there were several problems with the bill. For one thing, it was attached to an unrelated bill dealing with tax exemptions for energy efficient appliances and guns. He says it's an example of an unconstitutional practice called bobtailing.

Second, he says the bill would "permanently entangle a misguided federal ethanol policy with state law."

"While we understand that local retailers and distributors want to preserve the opportunity to obtain blending tax credits, we don't believe it is wise to further support federal ethanol policies that have been proven ineffective and, in many ways, counterproductive. It is well documented that increasing ethanol production and consumption has not and likely will not lower gas prices or increase the nation's energy independence," he wrote in his veto message to state lawmakers.

He said the federal ethanol policy is a bad idea that needs to be abandoned. But Fields says, "That's a non-factor. Ethanol is the market in South Carolina, whether the governor or anybody else likes it. South Carolina businesses and consumers should be the ones that benefit from that."

Gov. Sanford says another reason for his veto is that giving preference to local retailers over out-of-state suppliers could be unconstitutional under the Commerce Clause of the U.S. Constitution, which protects interstate commerce.

State lawmakers will go back to Columbia June 25 to consider the governor's vetoes.