Summer is nearing, and like clockwork, the media can't seem to go five minutes without talking about the extreme pain inflicted on consumers by higher gas prices. Shrill comments about how Bush should "do something" are a mainstay of any coverage. Recently, the candidates joined the fray.
Obama has come out strong against the gas tax holiday that is being touted by the other candidates, McCain and Clinton. He claims that the tax cut will only represent a meager savings of about 25 dollars a month, and in exchange cost over 300,000 jobs and a higher deficit. The media, in an effort to have something positive to say about their wunderkind, have fallen all over themselves agreeing that Obama is basically correct; sort of like the way a pre-school teacher encourages young pupils who have created Rorschach-like crayon art.
While there is some truth to what Obama is saying, he is wrong for condemning the gas tax holiday. Moreover, although Obama would never admit it in one of his inspirational speeches, the very platforms he supports have increased the cost of gas to Americans. If we really want to reduce the cost of gas, here are five ways to do it.
1) "Not much" is better than "nothing" – Obama is right that the average American wouldn't save much with a gas tax holiday. But they would save something. That's the point. There isn't much the government can do to lower the price of gas in the US quickly, considering global demand (where, in some parts of the world, gas prices make U.S. prices look cheap by comparison), lack of refineries, and price runs by the energy trading sector. The first and most immediate impact we can have on gas prices is to suspend the gas tax. No, 300,000 people won't lose their jobs, but yes, it will mean a slight increase in the government's budget deficit. In the current economic environment, this is a tradeoff we can and should make.
2) Say NO to more taxes on oil companies – Funny thing about windfall profit taxes on oil companies. Like all businesses, oil companies simply pass the cost of doing business onto the customer. You are the customer. When our politicians talk about increasing taxes on oil companies, this will mean an increase in the prices we pay for gas. Politicians don't like to admit this, but it's true.
There are two questions we must ask ourselves when this is the prescription: Will those higher tax rates directly reduce the cost of gas (and if so, how)? Should those higher taxes actually result in an increase in taxes collected by the government (doubtful), how will that money be used to relieve the increased costs on consumers? The truthful answer is "No," and "It won't," respectively.
The fact is, oil company profits have not been out of line or a real windfall as described by the left. Nor has "big oil" contributed to the run up on gas prices. Oil prices have been run up because of higher global demand, a lack of refineries, and the way energy is traded on the market. Oil companies have been doing better in the last few years mainly because the worldwide demand for fuel has reached an all time high as more and more nations industrialize. We can continue to ignore this reality to our detriment, and one day we will find ourselves competing even harder (read, even higher prices) for the same oil resources that exist today. Which brings me to the next item:
3) Allow offshore/ANWR drilling – The US has vast oil reserves that continue to go untapped due to objections from the left. Both Obama and Clinton would likely continue a moratorium on drilling off the cost of the US (which expires in 2012), even though doing so would relieve at least some of our reliance on foreign oil. Democrats generally reject such ideas on environmental grounds, but provide no other options to address the real need for fuel in our growing economy, nor to answer the growing cost of that fuel (both in terms of dollars and continued strife in the Middle East) to Americans.
Environmentalism IS a concern, but there are ways to mitigate these concerns. Democrats could negotiate for higher environmental protections/programs in exchange for support of drilling. Democrats could reach a bi-partisan agreement that would reduce our dependency on middle east oil, increase our standards for protecting the environment and even put us on a path to wean ourselves off oil. But there has to be a discussion to get there. So far, any discussion on this issue has been taboo for the left. Meanwhile, you pay higher gas prices.
4) Build More Refineries – Believe it or not, it's not just the cost of crude that has increased gas prices. It's the lack of refineries to process crude into gasoline suitable for cars. Like offshore drilling, this is due to an environmental/NIMBY concern. That's all fine and good but we can't be upset at higher gas prices if we are unwilling to build facilities to create gas.
5) Fix the way energy is traded – like any market, the energy markets are open to manipulation by traders who have the resources to drive prices in a favorable direction for them. As a result, one of the reasons why gas prices continue to climb is due to market manipulation. The market for buying energy needs to be revamped to ensure that the prices for energy are not influenced by the manipulations of a few who have managed to "corner the market." This is a difficult task, and a difficult position for a person like me, who believes in a free market. But something needs to be done here.
Notice that I didn't talk about things like investing in green technology. The most popular, energy efficient car that is available today, the Toyota Prius, was not developed with help from the US government, in fact it was created by a Japanese company. Their investment in research and development created a product that not only helped the environment, but lowered the cost of gas for its owners. As a result, demand for the Prius continues to be extremely strong, paying Toyota back for their investment, as well as having the effect of reducing emissions and consumption of gas among Prius owners. Now, several other auto makers, including U.S. ones, have started following suit, offering similar products. All of this was accomplished WITHOUT increased CAFE standards or other draconian government regulations.
It's this type of self serving environmentalism, and not the self sacrificing type of environmentalism that the extreme left touts, that will reduce emissions and help make our society a truly greener one.Powered by Sidelines