Considering their recent fumbles, no one can rightly accuse House Republicans of being marketing geniuses. But the campaign they launched last month, the “Pelosi Premium,” highlighting how Democrat energy policy drives up the cost of gasoline, is dead on.
Covering congressional energy policy, the Politico today dismissively writes of the GOP slogan: “as if House Speaker Nancy Pelosi (D-Calif.) personally sets the price of gas at every filling station across the land.” The Politico may have reporters with great Washington contacts, but the newspaper needs to send its reporters back to school for some basic economics courses. No, Pelosi does not personally set the price of gas in her office every morning. But everything she has done through policy since taking office has raised the price of gas at the pump.
Anybody who passed Economics 101 will tell you that a decrease in supply of a commodity will increase its price. Liberals have restricted our national supply of oil for decades, a practice only increased under Pelosi. In 1995, Democrats began limiting oil production in the Arctic National Wildlife Refuge. In 2006, they extended the ban to the Outer Continental Shelf.
More recently, Democrats in Congress moved to thwart regulations necessary for commercial development of oil shale. An MIT study shows that 750 billion barrels worth of oil shale in Colorado alone would be enough to potentially power the U.S. economy for decades. Full-scale production of the reserves within five years could completely end U.S. dependence on OPEC by 2020.
A Department of Interior study shows that the Green River Formation in Colorado, Utah and Wyoming has an estimated 1.2 trillion to 1.8 trillion barrels of oil. Developing 800 billion barrels of this shale would produce three times the oil in the proven reserves of Saudi Arabia.
The recent House energy bill also included multiple tax provisions guaranteed to drive up prices at the pump, including: 1) increased taxation of income derived from foreign oil and gas production; 2) reduction in the deduction taken by oil companies for domestically produced oil and natural gas; and 3) a change in the amortization period for oil and gas exploration equipment, which raises oil company tax payments.
In the long term, raising taxes on the cost of capital for exploration and production makes some domestic energy projects less viable, which decreases supply and raises prices. In the short term, tax-paying corporations tend to recoup increased tax payments in the form of higher retail prices.
Costly New Mandates
Congress first mandated use of biofuels in 2005. The 2007 House energy bill more than doubled the amount of biofuels mandated for 2008 and more than tripled the amount for 2015. Analysis of the bill shows that hundreds of new factories will be required and perhaps a billion tons of plant material will need to be hauled around every year. Estimates of the required investment start at tens of billions of dollars. And unlike gasoline, ethanol cannot be shipped via pipelines and must be transported via rail, barge or truck. The logistical and regulatory costs of mixing ethanol into the fuel supply are a huge factor driving up prices at the pump today.
For months now, Americans have been telling pollsters that the No. 1 issue they will be voting on this November is the economy. According to Gallup, 60 percent of Americans say they are cutting back significantly on household spending to compensate for higher gas prices. Americans deserve to know who is responsible for their soaring energy prices, and lazy reporting and kabuki theater hearings in Congress do not help them pay their bills.
- Home sales in the areas hardest hit by rising foreclosures are up, leading many economists to believe the housing crisis is already over as sellers are pricing more realistically.
- Teachers unions in Washington forced the state to turn down a $13.2 million gift from the National Math and Science Initiative (started by Bill Gates and Michael Dell) because the contract based teacher pay on student performance.
- The International Atomic Energy Agency accused Iran of “a willful lack of cooperation” on its nuclear program.
- Facing higher labor prices because of stepped-up enforcement of immigration laws, farmers in New York are switching from labor-intensive crops to crops that can be harvested by machines.
- Despite its status as “the granddaddy of the greenhouse gas emitters,” Germany is rapidly building coal power plants — including the world’s biggest, in the Rhine Valley.