Gasoline and Government
By Joe Mariani (04/26/06)
Gas prices rise, and suddenly everyone in Washington becomes a raging anti-capitalist. (Washington D.C., that is -- the other Washington already has more than its fair share.) Outrage over the audacity of oil companies daring to make money is something you expect to hear from a hippie at a Left-wing anti-everything rally, not the leadership of the greatest capitalist nation on Earth. The shock comes upon hearing the same rhetoric coming from both sides of the aisle.
House Speaker Dennis Hastert (R-IL) and Senate Majority Leader Bill Frist (R-TN) asked President Bush to order a probe into "price gouging" and "fixing." I can think of no better way to feed into the standard Liberal conspiracy theories concerning oil companies. But the Federal Trade Commission investigated the same allegations yet again just last year, and summed up "the vast majority" of thirty years of similar investigations by concluding that "market factors" were "the primary drivers of both price increases and price spikes." Politicians are considering whether to temporarily suspend gas taxes, but Democrats want to raise taxes (surprise!) on oil companies to "pay for it." Not to be outdone, Senator Arlen Specter (R?-PA) has begun gathering support for a "windfall profits" tax on oil companies! I wouldn't be surprised to see the Greenpeace flag flying over the Capitol building tomorrow instead of the Stars and Stripes, if not the ol' Hammer and Sickle itself. It just goes to show how skin-deep the Conservative beliefs of too many Republicans really are.
A lot of people point to the $400 million retirement package awarded to Exxon Mobil CEO Lee Raymond and ask, in effect, "why don't the oil companies give me that money?" Politicians point to that figure in their complaints that oil companies make "too much money," whatever that means. The answer, according to politicians and Liberals, is for the Federal government to dictate how much profit oil companies are allowed to make -- in essence, to nationalise the oil industry. Is that really what we want to happen, and is that the precedent we want to set? Perhaps we'll see a Federal limit on actors' salaries next, because movie ticket prices are getting too high. It's capitalism! Supply and demand!
If the government is really interested in lower gas prices, there are plenty of ways to help without slipping into Socialism. Chief among these would be eliminating gas taxes, permanently. The Federal government tacks 18.4 cents onto the price of every gallon of gasoline sold, and each state adds an average of 27.5 cents to the price as well. The companies that actually ship, refine, transport and sell the gas only make about 8 cents in profit on every gallon sold. And then they pay taxes on that.
Another thing the Federal government could do to lower the price of gas is to stop the practice of mandating "bouquet blends" for different regions, a result of letting environmentalists dictate policy. Such artificial controls make it impossible for places with a surplus to relieve areas of shortage. Environmental restrictions were lowered in the aftermath of Hurricane Katrina to allow that region to use gas from others, and it worked. But when GOP lawmakers tried to expand the easing of restrictions, Democrats accused them of exploiting Katrina to make money, and they backed down.
Yet another example of unwarranted government interference is the forced reliance on ethanol. The energy bill Congress passed last year should have simply ordered the use of oxygenated blends, and allowed the market to figure out which worked best in different areas. Instead, the ethanol lobbyists did their job well. Politicians promoted and protected ethanol use, while refusing to protect manufacturers of rival additive MTBE from lawsuits. (Both are carcinogens, but it would cost more to clean MTBE from water supplies in event of a spill.) The coastal states were forced to switch to ethanol, which is expensive to make and hard to ship, and works well only in the Midwest, where supply lines are short. It turned out that domestic ethanol manufacturers couldn't keep up with the demand, so we have to use imported ethanol -- and imported ethanol carries a 54-cent tariff on every gallon.
The most direct cause of high gas prices is something the Federal government could only partially avoid -- the high price of foreign oil. Hasn't anyone in the government noticed that gas prices rise when oil prices rise, and fall when oil prices fall? For decades, the environmental lobbies that have influence over the entire Democratic party (and too many Republicans) have forced us to rely more and more on foreign oil. Now, with China buying every drop of oil they can get their hands on, we see the result.
We have not had a new nuclear power plant since the 1970's, nor have we had new oil exploration or drilling. The same Liberals who complain that we need to stop using foreign oil consider ANWR (the Alaska National Wildlife Reserve) and the continental shelves to be some kind of holy ground. But if not foreign oil, and not domestic, than what? If Congress had any real desire to lower the price of gas, we would see oil rigs spring up on that desolate patch of barren Alaskan wilderness overnight. We would see offshore drilling on both coasts. We would see workers breaking ground for new refineries and nuclear plants. For crying out loud, Cuba is drilling off the Florida coast -- why can't we?
Instead of taking steps to alleviate the problem, Democrats and big government Republicans may use it to exert greater control over what should be solved by market forces. In the face of gas price complaints, Congress will likely impose punitive taxes, more restrictions and tighter regulations on America's oil industry instead of lower taxes, fewer restrictions and more American self-reliance. If they do, it will prove to be a colossal mistake. Haven't we learned by now that the worst way to solve a problem is to let the government take charge of it?
http://guardian.blogdrive.com/archive/cm-04_cy-2006_m-04_d-25_y-2006_o-0.html
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