Compounding the problem is the dependency of the U.S. and other countries on foreign oil. The U.S. produces about five percent of the world’s petroleum while consuming about 20 percent. Although the U.S. does not buy oil from the most unstable oil-producing regimes, other countries do. When that supply is restricted, those countries turn to our primary suppliers, which drives up prices for everyone. The wave of Middle East uprisings which began in January may be the factor most responsible for the current increase in gasoline prices, felt all over the world. Other significant contributing factors include increased demand from Japan for oil, because of its nuclear plants being out of commission, and ever-increasing demand from fast-growing countries like China and India. Venezuelan president Hugo Chavez just announced in April that he is hiking taxes on crude oil exports. The U.S. is feeling the pinch even more than other countries due to the debasement of the dollar.
Senate Democrats ignore these underlying factors and instead blame the oil companies for high gas prices. They want to slash tax breaks for oil companies, and direct the money instead to alternative fuels, essentially picking winners and losers in the energy industry. Oil companies already pay a higher percentage of their income in taxes, 41.1%, than the average for all other S&P Industrials, 26.5%. Raising taxes on oil companies will not work, because they will just pass the costs along to consumers. Democrats blame the oil companies instead of admitting the higher prices are caused by Middle East turmoil, because then they would have to acknowledge that drilling locally would fix the problem. Environmentalists in the Democrat Party prevent them from selecting the common sense solution of expanding offshore drilling.