Morning Bell: Holding the Left Accountable on Energy Prices
Conn Carroll /
The most important thing to remember as the debate over energy prices becomes a major issue in 2008 is that liberals want Americans to pay higher energy prices. That is why they sue to stop natural gas drilling in Wyoming, new refineries in South Dakota and coal power plants nationwide. The whole purpose of the Lieberman-Warner carbon capping bill was to increase the cost of energy to force Americans to use less of it. But now Americans are beginning to catch on to the left’s game, and they are not happy.
According to Rasmussen Reports, 67% of voters believe that offshore drilling should be allowed, and 64% believe lifting the ban on offshore drilling will lead to lower gas prices. A new Reuters poll found that 60% of Americans favor more domestic drilling and refinery construction to cool record prices.
Facing an American public increasingly hostile to their energy policy, liberals in Congress are scrambling to find new arguments and policy proposals that can provide them with a patina of political cover. They include:
- Lifting bans on domestic oil production will not lower energy prices. This liberal argument comes in two forms: 1) developing X oil well will not lower the price of gas and 2) it will take 10 years for the increased supply to lower prices. These arguments are especially pernicious because applied to each oil project today, they are technically true. However, if the test for developing any single oil field was whether it alone would lower the price of gas, then no oil field would ever be developed.Drilling in the Arctic National Wildlife Refuge will not lower gas substantially by itself, but there is so much more oil currently banned from production. Also, as the Washington Post’s Steven Pearlstein points out: “In energy, as with all commodity markets, prices are set at the margin — based on the last transaction — and short-run demand doesn’t change much in response to price fluctuations. In such markets, even small changes in supply can have a big impact on price.”Finally, liberal complaints that lifting domestic drilling bans today would take years to increase supply are completely unpersuasive since liberals have been making the same argument in support of oil production bans for decades now.
- Oil companies leave billions of acres of already leased land idle. This incredibly deceptive argument is new to the left’s anti-energy arsenal. It is true that, as the left claims, oil companies already have 33 billion acres of offshore leases they are not currently drilling on. But these lands are far from idle. Oil production takes time and requires years of exploration and permitting. Oil companies are already paying billions of dollars every year for land they are exploring, and under current law, if they do not begin drilling by the time their lease is up, they lose their right to drill. This does not mean there are not billions of barrels of more profitable oil in banned areas. The Department of the Interior estimates that their are 19.1 billion barrels of oil and 83.9 trillion cubic feet of gas in the banned areas Outer Continental Shelf alone.
- Speculators are to blame for the high price of gas. When all else fails, blame the moneychangers. This argument predates not only the environmental movement, but the country itself. As American Enterprise Institute scholar Kevin Hassett points out, Milton Friedman dealt with this specious claim in 1953: “If speculators know that the price of something is going to go up a month from now, they buy today. If they are correct, they make money, and the price change is smoothed by the higher demand today. … If speculators are, as is popularly believed, brilliant tacticians who are making a killing, then their activities are stabilizing. Speculation is good.”
Already there are cracks in left’s unity on the drilling issue. Sen. Jim Webb (D-Va.) has co-sponsored a bill with Sen. John Warner (R-Va.) to lift the ban on natural gas production off the coast of Virginia. More importantly though, Speaker Nancy Pelosi (D-Calif.) is refusing to even allow the House to vote on lifting the offshore drilling ban. She must know many from her own party would vote for the measure. After all, they would only be responding to the fact that their constituents are eager to hold them accountable on the issue.
Quick Hits:
- The Iraqi army is facing little resistance as it dismantles the Mahdi Army militia in Sadr City.
- Despite having no farmers, the District of Columbia received $10 million in the farm bill.
- The White House threatened to veto the Countrywide bailout bill unless the legislation dropped the creation of a permanent housing slush fund.
- The Justice Department has charged more than 400 brokers, appraisers, bankers and lenders in a federal crackdown on incidents of mortgage fraud that have contributed to the housing crisis.
- Sen. Barack Obama broke one of his promises to the American people yesterday when he became the first presidential nominee to bypass the public financing since it was created in 1976 after the Watergate scandal.