September 8, 2005

Governor Brian Schweitzer

Office of the Governor

Montana State Capitol Building

P.O. Box 200801

Helena, MT  59620-0801

Dear Governor Schweitzer:

The effects of Hurricane Katrina have devastated the residents living along the gulf coast of the United States, and I would like to commend you on your willingness to provide Montana’s resources to help with the relief and recovery efforts.

While our prayers remain with those immediately impacted by the hurricane, we are also aware of the ripple effect the storm has had to our nation.  In Montana, the most notable impact has been on our gas and diesel prices.  Addressing fuel costs is one of Congress’ immediate priorities, and we will be considering many measures to provide short-term relief and long-term solutions to problems within the industry that led to these record high prices.

There are many contributing factors leading to today’s record fuel prices.  Developing economies in countries such as China and India are consuming oil in record amounts and their demand will only grow in the future.  Also, the newest refinery in the U.S. was built in 1976.  Although updates and new technologies installed on these existing plants have increased our refining capacity by 10.8%, our domestic needs have increased by 17.5% during the same time.  This lack of domestic refining capacity has resulted in the need to import 39% more refined gasoline today than in 1976.  These effects, coupled with the disruption to fuel production, refining and transportation in areas impacted by last week’s hurricane, have all contributed to the spike in today’s fuel prices.  In the coming weeks, I will be actively engaged in all efforts to find energy relief for Montana’s citizens.

While there are few concrete actions the government can take to reduce today’s wholesale fuel prices, there is something we can do today to reduce Montana’s retail prices.  That is why I am supporting the Gas Tax Relief Act.  This legislation will immediately, upon enactment, suspend the 18.4¢ federal excise tax on all highway motor fuel for 30 days.  General revenue funds will reimburse the lost revenue to the highway trust fund resulting in no negative impact to Montana’s transportation infrastructure.

Recently, Governor Sonny Perdue suspended the Georgia state gas tax providing immediate relief in that state.  Several other states are now looking at similar proposals.  I urge you to support the federal efforts to suspend the fuel tax, and to follow Governor Perdue’s lead and provide a similar, temporary fuel tax holiday in Montana.  Simultaneous suspension of the federal and Montana state fuel taxes would provide almost 50¢ per gallon in fuel savings to Montanans.

As a former state legislator and Lieutenant Governor, I am fully aware of Montana’s legal requirement to the state highway trust fund and the need for a state match to receive federal funds.  However, Montana currently finds itself with a budget surplus that could be used to provide immediate relief from high fuel prices to our residents without jeopardizing future transportation funding.  Of course, such action would need to be undertaken in a careful manner so as not to affect the statutory fuel tax distribution formula relied upon by Montana counties.  I am confident that your administration, working in conjunction with the legislature, can devise such a plan. 

Montanans need and deserve a break from the high cost of fuel.  Suspending the state fuel taxes and reimbursing the highway fund with general revenue funds will provide Montanans this much-needed break.  Thank you for your commitment to Montana's energy future and for your time and attention to this important issue.

Sincerely,

Denny Rehberg