Tuesday, June 10, 2008

Democrats, Oil Prices, and the Environment

The Democrats have a bit of a problem right now.  Gas prices are shooting through the roof and they want to say they're doing something about it.  Their plan is a windfall tax on oil companies.  This tax (which the Republicans blocked so it probably won't happen anytime soon - if it happens at all) is kind of a "feel good" tax.  Why?  Because it punishes the oil companies for making too much money but it doesn't help the consumer at all.  Think about it, will gas prices drop because oil companies may have to pay more taxes?  I don't think so.  So it's a tax that makes "the masses" happy because our benevolent government is sticking it to "big oil" but doesn't really help the consumer at all.

So who does it help?  It helps the government by giving them more revenue and it also helps the environment because a way to avoid the tax is to invest in alternative energy.  Hmmm... the environment.  Coincidentally, there are a large number of Democrats who believe that burning oil in all of its forms, as well as other fossil fuels, is killing the environment.  Their solution is to find alternative forms of energy and to stop any expansion of current oil and gas drilling operations.  While they have been successful at blocking the expansion of drilling and making it nearly impossible to build new refineries, they haven't been able to do much for alternative energy beyond a few tax credits.  So what's happened is they've increased our dependence on foriegn oil by not allowing us to drill for our own oil.  This dependence also puts us at the mercy of the world oil market and any price fluctuations that happen there.  However, that's not all bad because what many of them long for is to have oil prices high enough that alternative energy is economically feasible.  I have heard many a Democrat wishing that the government would raise gas taxes so that gas prices would go up.  This would encourage people to conserve and/or use alternatives.

Well they got their wish.  Oil and gas prices are skyrocketing and so, by comparison, alternatives are becoming better values.  Unfortunately, the people who are the hardest hit by these high prices don't have the luxury of converting to alternative energy.  They can't just sell their truck for a hybrid - they don't have that kind of money.  They are struggling to make ends meet and the cost of fuel is killing them.  What's worse is that a huge number of these people are Democrats.  Uh oh!

So what do you do?  Why you blame it on Republicans, of course.  It's easy.  The current President is a Republican and he's only slightly more liked than a bout of malaria (and yet he still gets higher ratings than the Democrat controlled congress - go figure).  So it's the President and the Republicans.  They've engineered this gas crunch to line their own pockets.  They are pure evil!

The truth, however, is much more complex.  There are so many factors that it would be naive to assume that only one set of actions is responsible for the current crisis.  Some blame the war in Iraq and OPEC for the high prices but OPEC is saying that they are meeting demand just fine and have no need to increase production.  So is it Iraq?  Well, if plenty of oil is being produced with out it, maybe Iraq isn't the problem either.  What about market speculation?  What about a shortage of refineries?  What about the strategic oil reserve?  What about world competition?  What about our restrictions on drilling?  What about US consumers' unwillingness to conserve?  I'm sure there are a thousand more "what about" questions that can be asked.  I think the truth is that there's enough responsibility to go around.

The environmentalists, which are mostly Democrats, have been working for years to regulate into extinction the production of fossil fuels.  They have many people who believe their rhetoric and support their proposed policies.  However, making fossil fuels harder to get to makes them more expensive and contributes to our current problem.  Personally, I think it's ironic that these same people who have really pushed to raise oil prices are the same ones that want to punish the oil companies because prices have gone up.

This isn't to say that the Republicans are innocent here.  The war in Iraq has had a destabilizing effect on the middle east which has spurred speculation and is also partly responsible for high oil prices.

However, it's the Democrats who are in a bit of a bind.  They have to figure out how to deal with an issue that they helped create and that many of them think is a good thing.  What's worse, is they have to find a plan of action that doesn't endorse high gas prices (which punishes their working class constituents) but doesn't hurt the environment (which angers the environmentalists).  So far the best they've come up with is to try to punish oil companies for having the audacity to actually make a profit.