Gas Prices: Who to Blame, What to Do

Gas Prices: Who to Blame, What to Do

Most Georgians can't afford $3 a gallon gasoline. If prices stay where they are this month, our working families will have to cut their household budgets to cover the increased costs. That means a loss in sales to other businesses and fewer jobs. And since everything we buy is affected by transportation costs, we'll see inflation climb on all retail goods. That's a real threat to what has otherwise been a booming economy.

Something has to be done. The first logical step in doing something should be determining what has caused gas prices to more than double in the past year.

Unfortunately, in an election year, the logical way of doing things usually takes backseat to politics, and this year is no exception.

So we must first determine who's to blame for the high prices.

Republicans. They did it. They haven't passed higher gas mileage requirements for new cars since they took over Congress in 1994, when the requirement was 27.5 miles per gallon.

They could have passed a Windfall Profits Tax on the oil companies last year after Hurricane Katrina when the oil companies raked in the highest reported profits in the history of mankind, while working Americans were economically stifled under the same $3 a gallon prices we face today.

But wait a minute. Democrats. They did it. They had both Houses of Congress from 1985-95, both Houses and the Presidency from 1992-1995, and did nothing to increase those same gas mileage standards.

But they did find time to block every attempt to explore and open new oil fields in the United States such as in the Artic National Wildlife Reserve (ANWR) and in the Gulf of Mexico, which would have increased supply and reduced our import of oil from the volatile Middle East. If we had started drilling in ANWR when first approved by Republicans, and had encouraged construction of new oil refineries, we simply would not have the shortages - real and imaginary - that we do today.

Democrats also added to today's crisis by passing a Windfall Profits Tax against oil companies in 1980, right after a similar big jump in retail prices. The effect was a decline in both new or improved oil refineries, and a curtailment of exploration for new oil reserves.

The nonpartisan Congressional Research Service reported in 1990 that the effect of the 1980-87 Windfall Profits Tax, "reduced domestic oil production between 3 and 6 percent, and increased oil imports from between 8 and 16 percent ... this made the U.S. more dependent upon imported oil."

The Sierra Club wing of the Democratic Party and their host of affiliate "environmental" groups are also hugely responsible for today's oil problems. Their decades-long opposition to new oil refineries and domestic oil fields, nuclear power plants, coal, and even hydroelectric facilities has led to a near stagnant supply of energy, in the face of constantly growing demand.

That has finally caught up with us in the form of skyrocketing prices and unsteady supplies, which was precisely their intent. Radical environmentalists, as outlined in former Vice President Al Gore's book "Earth in the Balance", believe that low prices for energy are actually bad for the environment, and that $5 a gallon gasoline is what it will take to force us evil consumers to conserve by giving up suburbia for Stalin-style public housing projects, where we can be better supervised into adopting the liberal point of view on everything.

Finally, we can blame both parties for the impact of immigration and Red China on gas prices.

Our exploding U.S. population rate is now due largely to immigration - primarily illegal immigration - and that growth is demanding ever-increasing energy. Bill Clinton and George Bush are equally guilty for letting 12 million illegal aliens walk into the country in open violation of U.S. law.

And since Red China gained full access to our markets in 2000, their phenomenal manufacturing expansion (at the expense of our jobs) has led them to becoming one of the world's greatest energy users - and polluters. Thank Bill Clinton and a Republican Congress for that one.

Now that we've blamed everybody, we can get down to the real business of determining how we got here, and how to get out.

The world is using more oil than ever, and refinery capacity has not kept up with demand. We could produce more gas than at present, but simply lack the refineries to get the job done. Our refining capacity has in fact decreased since 1980, in spite of our oil use increasing by 25%.

This situation began with regulatory and legal attacks against building new refineries. These attacks raised the cost of new refineries to a level that oil companies couldn't profit from building one. In addition, because the radical environmentalists are noted for changing regulations with little or no notice, oil companies have been afraid to begin new projects on the real possibility the rules could change halfway through construction, making projects unprofitable.

So the oil companies have instead just run their old refineries at near 100% capacity, and shut down older plants instead of updating them.

That works fine until we have a Hurricane Katrina or some other major disaster that shuts down one or more refineries. Then suddenly we can't produce enough gas, even though we still have access to plenty of oil. One interesting fact in this current gas crisis is that for the first time, the United States is importing gasoline, not just oil.

Likewise, there is currently enough oil available worldwide to supply our demands, but not if a major supplier is suddenly cut out of the market through political instability. A leading cause of the current price run-up is fear that Iran's hard stance on building nuclear weapons will lead to a political or military confrontation that will remove their massive oil exports from the international market. There are similar concerns over the political stability of Nigeria, another of the world's major oil exporters.

Again, as in the case with refinery capacity, we find ourselves running much closer to capacity than in the past, when the world was capable of producing and refining a great deal more oil than we needed. Increased population and the industrial development of the Third World are pushing us closer to 100% capacity for oil products than ever before.

So we're paying the price at the pump.

We need immediate, intermediate, and long-term solutions to solve this crisis.

In terms of immediate measures, Republicans in the Senate have proposed a $100 immediate one-time tax rebate to all taxpayers to help towards higher gas prices.

Some of our states and federal legislators have suggested a temporary waiver of gas taxes. At the federal level, this would cut about 18 cents from a gallon of gas, but would eliminate all federal highway funding for the duration of the waiver in the process. Democrats and some Republicans are proposing another Windfall Profits Tax on oil companies.

The most-proven short-term remedy for high gas prices requires nothing from Washington - conservation. Buy as little gas as possible till prices come down. Most people do that naturally when faced with the shock at the pump, and find ways to cut trips and generally drive less. This week, that consumer remedy is already taking effect, as the price of oil has begun dropping on news that oil stockpiles are growing in light of reduced consumer demand. Markets do work.

In terms of intermediate measures, the House this week voted on two bills that address outrageous oil company profits and long-term refinery needs in positive ways.

The Federal Energy Price Protection Act of 2006, HR 5253, prohibits price gouging and price-fixing, and sets tough new federal fines and prison sentences for oil companies and their executives who are proven to use this and future energy crunches to gouge the public on prices. It includes fines up to $150million, and jail terms up to 2 years. It allows the Federal Trade Commission to define "price gouging", as many states already have.

It passed the House by a 389-34 margin, with 190 Republicans and 198 Democrats voting yes.

The House also addressed the issue of refinery capacity with H.R. 5254, the Refinery Permit Process Schedule Act. This bill allows companies to build new refineries in compliance with all existing regulations, and not be stopped midway through construction by some new regulation. It also streamlines the process for applying for the multiple federal permits necessary to begin a project. It changes no existing regulatory requirement.

Democrats defeated it, at least temporarily, even though the majority of the House voted for it by a 237-188 margin. 224 Republicans and 13 Democrats voted for the bill; 185 Democrats and 2 Republicans voted against it.

The bill was brought forward under a "suspension" rule, which requires a two-thirds majority vote for passage, or 280 votes. Fortunately, we can count on this bill being back on the floor in short order under regular rules, which require only a simple majority.

But the vote provides the perfect fresh example of what has happened to our oil supplies over the past two decades. Once again, Democrats have blocked America's ability to increase our ability to supply ourselves, but will then be first to criticize Republicans when that vulnerability surfaces as high prices at the pump.

For the long term, President Bush has spoken forcefully on our need to break dependence on oil altogether, through converting our cars and trucks first to hybrid technology to lower oil consumption, then ultimately to alternate fuels, such as ethanol and hydrogen.

The concept appears to have universal bipartisan support, although I'm certain that with time somebody will figure a way to overcome that.

http://www.house.gov/list/speech/ga09_norwood/gasprices.html