Washington Examiner - Hiking Energy Taxes and Limiting Supplies Won't Bring Gas Prices Down

Op-Ed

By U.S. Sen. David Vitter (R-La)

Whenever the price at the pump goes up, much of Washington responds swiftly and forcefully -- by demagoguing the issue, demonizing "Big Oil" and holding hearings on price-fixing. Amazingly, this hasn't solved our energy problems just yet.

Now we're seeing it yet again. But to be fair, this time things are a little different. American families are suffering from not just a spike in gasoline prices but a prolonged increase that no one thinks will ever be undone.

And Washington liberals led by President Obama and Sen. Harry Reid are rising to the even more serious occasion. Their current version of demagoguing the issue includes actually pushing policies that have helped cause some of the price increase and are sure to make it worse -- namely, cutting off access to even more of our domestic oil and gas resources and increasing taxes on domestic production.

This week, Reid is bringing a bill to the Senate floor to "cut taxpayer subsidies to big oil." The factual translation of this is that the bill would increase taxes on energy companies by disallowing them from claiming some of the same deductions thousands of other American manufacturers and businesses can claim, some of which are nearly as old as the income tax itself.

This is a pretty interesting approach to decreasing the price at the pump since two of the most basic rules of economics are that corporations don't pay taxes, people do, and that if you tax an activity, you're going to get less of it, not more.

You have to hand it to Reid -- he came up with a bill that would perpetuate not just one problem, but two, and would pass along even higher prices to the consumer.

At the same time -- indeed for the past year -- Obama has shut off more and more access to domestic oil and gas resources. In overreaction to the BP disaster, he imposed a moratorium in the Gulf that largely continues today in the form of a de facto moratorium, or permit logjam.

He also canceled plans to allow exploration offshore Alaska, offshore Virginia, and in our vast oil shale resources in Utah. He's held up or actually revoked multiple energy development permits. And he's dramatically increased the regulatory burden and uncertainty on all domestic energy activity.

This means less supply. I mentioned two basic rules of economics above, but there's one that's even more fundamental -- the law of supply and demand. Less supply means prices go up, and Obama's policies are a recipe for much higher prices in the future.

So what's the solution? First, let's deal with the issue of all tax deductions, exemptions and credits responsibly through fundamental tax reform. I favor getting rid of almost all of them, but using that revenue to lower overall rates on everyone so we no longer have one of the highest corporate tax rates in the world.

Obama's own fiscal commission proposed this, but sadly the president won't lead on the issue. Maybe that's because while this reform would affect oil and gas companies, it would also mean that Reid's favored gold mining companies in Nevada would no longer enjoy their enormous special tax breaks.

Second, let's open up access to our domestic energy resources, not shut them off even more. To accomplish this, I've introduced the 3-D Act with nearly 70 other lawmakers. 3-D stands for Domestic Jobs, Domestic Energy, and Deficit Reduction -- all major goals that would be advanced by producing more energy right here at home.

Americans are really hurting as our energy picture gets even worse. So let's deal with a serious issue seriously, not just demagogue it and continue business as usual in Washington.

Source