High gas prices cause more hot air

Bill Murchison
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Posted: Apr 25, 2006 12:05 AM

A lot of reassurance comes from the knowledge that on our fast-spinning planet some things never change. To name two of those things: the tang of Beefeaters and Schweppes, and the mechanical response of leading polls when gasoline prices get too high for general comfort.
 
It's the latter experience that prompts serious contemplation of the first. I ask: Who wouldn't need a stiff drink upon hearing Ted Kennedy make all kinds of threatening noises about "price gouging" at the gasoline pump?

We know at that point what's coming: a rising chorus of commentary on the topic of oil companies and their indifference to the public weal. It's the rerun of the 1973 to 1980 Washington sideshow that featured price controls imposed by Richard Nixon, congressional fulminations about "obscene profits" and finally, the imposition, under Jimmy Carter, of a "windfall profits tax" on oil.

This is how Washington behaves at moments of energy exigency, inasmuch as behaving so gratifies a certain kind of irritable voter, at the same time, it muffles discussion of government complicity in the problem.

Nobody would pretend that gasoline prices aren't again, as after Katrina and Rita, as high as a cat's back -- though not as high as they were, temporarily, three decades ago. You'd suppose our leaders would be trying to address the problem of undersupply at a time of rising demand and international tension.

Alas -- there on TV last weekend was Kennedy, advising that President Bush "should have called the head of the oil companies into the White House and started jawboning." By which I think he means demanding the companies lower their prices. In the Kennedy worldview, prices tend to be set not by market forces but by -- to employ the senator's word -- "greed." Evidently, the companies thought they could rob us blind without Ted Kennedy's noticing. Hah!

The senator then goes on about a windfall profits tax, cheerfully oblivious to some facts you might have hoped were lodged firmly in his personal recollection. The Congressional Research Service estimated in 1990 that Carter's windfall profits tax (really an excise tax) decreased domestic oil production by 3 percent to 6 percent, while pumping up dependence on foreign oil by 8 percent to 16 percent. Thank you, Congress.

On the other hand, when did reality last derail a comfortable political strategy? With voter/driver anger mounting over $3 gas, and polls since last year showing respondents sympathetic to a windfall profits tax on oil, political minds start to engage. Not just Democratic minds, either. In California, Gov. Arnold Schwarzenegger talks of a duty to "protect the people" and their access to "a product that everyone is relying on." In Washington, D.C., Republican House Speaker Dennis Hastert and Republican Senate Majority leader Bill Frist urgently want the Federal Trade Commission to inquire into alleged price gouging at the pump. The two took pains to notice the supposedly "unconscionable" pay package accorded retiring Exxon-Mobil head Lee Raymond -- a nice bit of populist demagoguery of which Ted Kennedy might have made use. As if Lee Raymond had single-handedly jacked up pump prices to render his retirement more plush!

Lacking a Jimmy Carter type to sign anything economically idiotic into law, Congress will likely pass on to other matters after some Category 5 bluster. Oil prices, bloated for now by anxieties over the Middle East and strong worldwide demand, rather than by a '70s-style embargo, will likely abate. But not as far as they might if Congress opened the Arctic National Wildlife Refuge to at least delicate exploration, and if California and Florida permitted the expansion of offshore drilling, and if environmental attitudes softened just enough to admit the need for growth in domestic refining capacity to enable the wider provision of what Gov. Schwarzenegger calls "a product that everyone needs" -- gasoline. And so on. And so on.

The silliness of the so-called energy debate won't send this country reeling back to the banal and brainless '70s. How nice it would be anyway if, when Ted Kennedy opened his mouth to discuss energy, we breathed hopefully instead of reaching for the hooch.