Pains at the pump

High gas prices have been the prod that the left has favoured to persuade Americans to abandon their SUVs and minivans, use mass transit, turn the thermostat down, produce less consumer goods and services, and stop emitting those evil greenhouse gases, says the Wall Street Journal.

However, you can be sure you won't hear that from Democrats or North Eastern Republicans on Capitol Hill. They're suddenly all for cutting gasoline prices just as long as it doesn't require producing a single additional barrel of oil. So how do they propose to reduce gas prices? By slapping a profits tax on Big Oil because of alleged price gouging.

As a Harvard University study has shown, when the United States imposed a windfall profits tax in 1980, prices rose to an inflation-adjusted range even higher than today and domestic production fell.

As for claims of "gouging," the price of gasoline at the pump in the United States has risen 25 per cent less than the rise in the global price of crude oil since 2003, according to Wall Street economist Michael Darda.

We've also heard proposals to force the oil companies to cut the pay of their CEOs to $500,000, but even if the salaries were chopped to this level – and all the savings passed on to the consumers – the gas price would fall by at most one-tenth of a penny.

Meanwhile, the White House refuses to attack the left's anti-consumer energy policies, says the Wall Street Journal. President Bush could instead be talking about the national and economic security need for a pro-domestic-production energy policy – starting with drilling in Alaska.

Source: Editorial, Pains at the Pump, The Wall Street Journal, April 29-30, 2006.

For text: http://online.wsj.com/article/SB114626605770339364.html

For more on Energy: http://eteam.ncpa.org/issues/?c=national-energy-policy

FMF Policy Bulletin/ 09 May 2006