More than two years ago, now-House Speaker Nancy Pelosi and her Democratic colleagues promised what they called a “common sense” energy plan to bring down prices at the gas pump. Since that time, the average cost of a gallon of gas has soared from $2.33 to $3.62, an all-time high.
Today, 744 days later, congressional Democrats finally unveiled their grand proposal to the American people.
To most Americans, addressing rising energy prices might include at least a bow to the law of supply and demand. It might contain some true common sense ideas such as stepped-up exploration, added domestic refinery capacity, or other measures to increase U.S. energy and reduce dependence on foreign supplies.
But Democrats made clear they have other priorities. They want to tax, sue and investigate their way out of this problem.
Unfortunately, their agenda will do nothing significant to increase the supply and reduce the price of gasoline in America.
A central component of the Democrats’ energy bill is to increase taxes on U.S. energy companies. This is almost bizarre. Democrats have clearly not learned the lesson from the 1980s when the windfall profits tax—a tax on oil produced in the U.S.—was first enacted.
We know now as a matter of certainty that this tax had the opposite effect than what was intended. It led to lower domestic oil production—not lower prices at the gas pump. In fact, the nonpartisan Congressional Research Service estimates the windfall profits tax decreased domestic oil production by as much as 1.2 billion barrels between 1980 and 1986. It also drained $38 billion that the domestic energy sector could have used to invest in new production and exploration, or development of alternative fuels.
At a time when our goal should be reducing America’s dependence on foreign oil, imposing massive new taxes on American oil companies promises an entirely different result.
Another key component of the Democratic plan dusts off an old chestnut—again calling upon the Federal Trade Commission to investigate the possibility of price gouging in the energy market. Democrats clearly believe Americans have short memories. The FTC has conducted dozens of investigations, including in the aftermath of Hurricane Katrina, and not once have they found significant wrongdoing in the marketplace.
The final component of the Democrats’ energy plan is to sue OPEC to force them to release more oil in the market. This is clearly an exercise in futility, and I suspect my Democratic colleagues know that. The idea of threatening foreign governments, and particularly our Middle East allies, is particularly ironic coming from the same Democrats who have routinely accused the Bush Administration of damaging our relationships with other nations. It is also ironic to sue other countries in an effort to get them to produce more oil, while at the same time preventing production here at home and making us even more dependent on foreign oil.
The real common sense solution, as we transition away from dependence on fossil fuels, is to increase the supply of domestic energy. We need to get the government out of the way and allow use of plentiful resources under our control. If Congress stopped penalizing and handcuffing our domestic energy production, we could produce an additional 2.7 to 3 million barrels of oil a day within a relatively short period of time.
That is why Senate Republicans have introduced legislation, The American Energy Production Act, an important step towards driving down gas prices for all Americans. If enacted, this new legislation would allow access 24 billion barrels of oil—enough oil to supply America for 5 years with no foreign imports. It would also provide for authorization to explore for American oil in the Arctic National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS).
Our country needs Congressional action on the energy problem that is tethered to reality. We do not need more sound bites and political pandering.
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