We all agree that gas prices are way too high but when it comes to the solution, there is a significant difference of opinion. The interesting thing is no exclusively republican or democrat solution has emerged; it is every man for himself as Congressional leaders pose before gas pumps and promise change.
To be honest, the remedies coming from Congress and the White House are bipartisanly asinine.
Democrat Senator Ted Kennedy wants to rob the rich to give to the middle class. He told Meet the Press “we ought to have a bipartisan effort to recapture, recapture these excessive profits that are going to the oil industry and return them to working families and middle-income families.” In an attempt to be the next Robin Hood sans the green tights (there is a scary mental picture), all he is doing is promoting socialism.
He is joined by Democrat Senate Minority Leader Harry Reid, who said, “if the greedy oil companies won’t invest their billions in profits in delivering affordable gas, then maybe America needs to take some of those windfall and put them to better use.”
No matter how much you hate them, the oil companies earned their money fairly in a free market system unlike the socialistic countries Kennedy and Reid aspire to emulate. As Texas Rainmaker points out, the oil company’s profit margin is 8.2% compared to a profit margin of 19% for the pharmaceutical and biotech industry, 18% for banks and 13% for diversified financial services, to name a few. I have more examples, but you get the picture: the oil company is not gouging us.
We are all used to Kennedy and the rest of his liberal democrat friends offering paranoid solutions, but the republicans are not acting too sane either.
The republican-controlled Senate Finance Committee requested tax returns from the top oil and gas companies. Republican Senator Charles Grassley said senators were concerned about the “record profits and significant executive compensation in the oil and gas industry. I want to make sure the oil companies aren’t taking a speed pass by the tax man.”
Let us be honest. The only thing these vocal politicians in Washington are interested in is garnering votes.
Before our representatives rush to the nearest lectern to spout their latest solution, perhaps it would do us all a world of good if we considered how we got in this predicament in the first place.
In a 1976 stump speech for his presidential campaign, Ronald Reagan was not reflecting on an oil crisis, he was predicting it:
“We’ve heard promises that our goal was to become independent of outside imports. Washington somehow refuses to learn that the best thing it can do is to do nothing. In 1958 there were 58,000 new oil wells being drilled. Then Congress got into the act with price controls and regulations. By 1973, we were only drilling 27,000. Frightened by the embargo and the consequent shortage of oil they freed up new oil discoveries from price controls. In just 2 years, we were up to almost 39,000 new wells.”
“But they wouldn’t leave well enough alone. Now we have a new energy bill and already the drilling rigs are closing down by the hundreds. In a few years we’ll be dependant on imports for 50% of our oil and what if we have an embargo then?”
The Gipper was frighteningly right. Today, thirty years later, 60% of our oil is imported and we are in danger of an Iranian embargo.
The democrats deserve much of the blame for today’s crisis. Democrats in both houses have consistently stood in the way of legislation that would have loosened the strangle hold on oil manufacturers. Just recently the democrats in the House of Representatives voted against a deregulation bill four times before the House finally passed it.
Democrats have also adamantly opposed any oil and gas exploration, development and production in the Arctic National Wildlife Refuge (ANWR), even though ANWR oil supplies could increase domestic oil production by 45 percent and create jobs for 1 million Americans across the nation. Current law leaves nearly 100 billion barrels of oil out of reach in Alaska and off our East and West coasts.
Because of onerous environmental laws, no new refineries have been constructed in the United States since 1976. In 1981 there were 324 refineries. Today there are only 148 and they cannot keep up with the demand. During the early part of 2005, the total capacity of refineries was 17 million barrels per day while the United States consumed an average of 21 million barrels per day.
We all agree the problem is getting worse, but bureaucrats like Kennedy and Reid keep trying to fix it the same failing way. Wiser minds are prevailing though. The Environmental Policy Act of 2005 has partially loosened the stranglehold on refineries, but it is also riddled with subsidies:
- $4.3 Billion for nuclear power
- $2.8 billion for fossil fuel production
- $2.7 billion to extend the renewable electricity production credit
- $1.6 billion in tax incentives for investments in clean coal facilities
- $1.3 billion for conservation and energy efficiency
- $1.3 billion for alternative motor vehicles and fuels (ethanol, methane, liquefied natural gas, propane)
The Energy Policy Act of 2005 encourages more domestic production of oil with incentives such as a streamlined permit process. It also promotes a greater refining capacity to bring more oil to market and increases the gasoline supply by stopping the proliferation of expensive regional boutique fuels.
The act is certainly a step in the right direction, but the government should let alternative fuel development run its natural course without intervention. The free market is already going toward alternative motor vehicles. Throwing a billion at the problem may unnaturally weight the market toward a type of fuel or alternative energy source that is impractical in the long run for the American consumer, but will give a company a short-term subsidy from the government. Consumers want to drive longer cheaper and car manufacturers know that. The marketing gurus will discover what Americans want and make it for them.
Government regulation slowly brewed the high gas prices under which we suffer. While there is no immediate fix, we cannot survive delay by the same politicians who created the problem in the first place. The great French Marshall Lyautey once asked his gardener to plant a tree. The gardener objected that the tree was slow growing and would not reach maturity for 100 years. The Marshall replied, “In that case, there is no time to lose; plant it this afternoon!”
In a 1975 radio address, Ronald Reagan warned his listeners against incomplete solutions. “Fearful of hard time I know some of you have probably written your Congressman or Senators urging some kind of action. That’s what you’ll get – some kind of action. May I suggest that you write and tell them no more tranquilizers? We want permanent cures for what ails us…”
Call your representatives and tell them you want less government control, not more. And tell them Ronald Reagan sent you.
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© Copyright 1999-2007 William Stewart. All rights reserved.
Comments
Ronald Reagan said and did lots of things that turned out true and right - putting nukes in Europe, calling the USSR the ‘evil empire,’ etc. Today’s Dems blocked the 2005 Energy Act for 4 years without offering an alternative. Your post is right - the law is not perfect, but a step in the right direction. I believe alternative (green) energy is the long term solution, and that the GOP should take the lead. A policy that embraces the development of new industries, jobs, and a secure nation are key tenets of the GOP.
The reason gas prices are up is not a political problem but more of a supply and demand problem. If any president or politician, Democrat or Republican, could control the price at the pump don’t you think it would be lowered as soon as people start to cry and complain.
I also think it’s ridiculous to haul the CEO’s of the oil companies before Congress to testify about the price of gas and making a profit. Government is never the solution to the problem, most of the time it is the problem.
You want gas to be lower? Write Senators Byrd and Rockefeller and let them know you support drilling in ANWAR and ask them how they voted on the bill that would allow that to happen. Let them know we should be drilling for oil in parts of this country that has large oil reserves. Instead we have let the enviro-wacko hybrid driving hippy crowd dictate our energy policies.
It’s very simple. When supply is up, prices are low. Period.
So you don’t support “Throwing a billion at the problem“, but you support the 2005 Energy Bill, which provided $85 billion in subsidies and tax breaks mostly to such “alternative” energy sources such as oil, coal, and gas.
Meanwhile, the oil companies benefiting from these subsidies and tax breaks (and reduced environmental regulations, so much for clean water) enjoyed RECORD profits on the backs of working men, women and families.
I guess it’s OK for government to spend billions as long as it goes to oil companies (and pharmaceuticals) and not to seniors, children, or veterans.
If you’re so concerned about the US dependence on imported oil, why not focus on the 268 million barrels of oil the US EXPORTS to other countries each year.
That’s as much oil as we imported from Iraq in 2001, the last year before the Iraq war. We don’t need to drill in ANWR until we start using all the oil we already get from Alaska.
Finally, since the world is running out of oil, why not use the oil in other countries first? Just wondering.
Jim: Did you read the article before you commented? I’m responding to each paragraph:
1) As I wrote in my article, I support the energy bill because it loosens some restrictions not because of the billions in subsidies.
2) The reduced environmental regulations in the 2005 Energy Bill will not reduce the quality of your drinking water, but it will help reduce the price of your gas.
3) Did I ever write that? You are creating a straw man.
4) Obviously, there are many facets to the increased dependance of oil and that is one to contemplate. But considering that Americans use 21 million barrels a day, it would only last for less than 16 days. No one would notice the difference.
5) ANWR is in Alaska.
6) Because if we are dependant on foreign oil and there is an embargo, we are up the proverbial creek without the proverbial paddle. We have already seen how Iran’s nuclear threat is causing prices to rise. In addition, the U.S. alone spends well over $100 Billion per year to ensure the free flow of oil from volatile regions of the world. (source)
Yes, I read your article.
1) You criticized throwing money at the problem, while at the same time expressed support for an $85 Billion subsidy bill. That inconsistent position warrants criticism and calls into question your commitment to fiscal conservatism.
2) Contrary to your popular belief, increasing the amount of pollutants that are allowed in my drinking water DOES compromise its quality. Meanwhile, what has happened to gas prices since the 2005 bill was passed? It hasn’t helped reduce the price of my gas, despite your claim that it will.
3) It’s not a straw man to point out the inconsistencies of your comments regarding federal spending.
4) The point is we aren’t using the oil we already have, yet the rallying cry is that we must drill in ANWR. You and yours imply that prices are soaring because supply is stretched so thin that we must drill no matter the costs to the environment.
If 268 million barrels is so small that we won’t notice the difference, then why be so worried about oil production from Iraq? It’s the same amount we imported from Iraq before the war. You can’t argue the importance of spending billions (not to mention lives) to protect the flow of oil from Iraq, and then casually disregard the same amount of oil that is exported as such a small insignificant amount that “no one would notice the difference”.
5) “ANWR is in Alaska.” No @^&#! kidding.
You do know that we already get oil from Alaska don’t you? Oil that’s not in the Alaska National Wildlife Refuge (ANWR). Remember there’s this thing called the Alaska oil pipeline? You may recall the Exxon Valdez oil spill? The primary source of US oil exports comes from the state of Alaska, so I stand by my point.
A significant reason that oil companies want to drill in ANWR is so they can increase their exports to other countries, not to increase the supply to the US. It is not in their financial interests to increase supply to the US. They understand the law of supply and demand which dictates that smaller US supplies results in higher prices for their products.
Meanwhile, the Republican rhetoric centers on oil shortages that are so urgent that we must drill in ANWR, pursue military options, and spend “well over $100 Billion per year to ensure the free flow of oil from volatile regions of the world.”
All the while, ignoring the fact that we export millions of barrels each year. If things were as desparate as the Republicans would have us believe, then we would not have an excess that allows us export that much oil.
1) As I said (this is the third time now), I support the loosened restrictions in the bill, not the subsidies.
2) Any fool knows that “increasing the amount of pollutants that are allowed in my drinking water DOES compromise its quality.” Where is your data that the 2005 Energy Bill allows more pollutants in the drinking water?
As for the gas prices, as I said before, this is a step in the right direction, it’s not a silver bullet.
Besides, there was this small hurricane called Katrina. Within a week of Hurricane Katrina’s landfall the national average retail price for motor vehicle gasoline rose by 46 cents to $3.069 per gallon. Prices of other refined fuels also rose quickly in response to the hurricane. In the immediate aftermath of Katrina alone, U.S. refining capacity was reduced by more than 2 million barrels per day.
Because our nation is still battling the effects of the hurricanes along the Gulf Coast last year, 22.7 percent of Gulf Coast oil production is still shut down. We have 340,438 fewer barrels of domestic oil available on any given day.
3) As I said (fourth time), I support the bill’s attempt to reduce restrictions not the subsidies. I suspect you are trying to pick a fight.
4) There you go stretching the truth again. I never said “we must drill no matter the costs to the environment.” Can you debate with hyperbole?
5) As I said, exportation of oil is an issue we should look at as well. But that does not mean we should disregard other facets that are affecting the price of gasoline.
You asked for “my data” regarding drinking water. My source is the bill itself..
Before disregarding my comments out of hand, you should read Section 322 of the bill which amended the Safe Drinking Water Act to allow the unregulated
underground injection of chemicals — including some carcinogens — during oil and gas development and during geothermal energy development.
In addition, Section 323 exempts oil and gas industries’ construction activities from compliance with Clean Water Act provisions that require all types of construction activities to reduce polluted runoff from these sites.
Of course, “any fool knows” (your words not mine) that injecting carcinogens at high speeds into the ground would NEVER have an effect on drinking water, right?
Attack my comments as hyperbole all you want. I have provided the facts to support my comments. Meanwhile you have offered a Kerry-esque response to being FOR the bill and AGAINST the bill at the same time.
Meanwhile your post about the Patriots for Peace was quintessential hyperbole; you’ve demonstrated your affection for the tactic quite well.