Congressional Issues 2010 ENERGY
Worries About Soaring Gas Prices
In capitalistic, free market nations, gas is relatively cheap and our standard of living is high.
In socialistic, government-regulated nations, gas is relatively expensive and the standard of living is low.
This is why Kevin Craig opposes government-management of business.
In terms of the number of minutes you and other Americans must work in order to buy a tankful of gas, the price of gas is lower today than it was in the 1980's, the 1970's, or even the 1950's.
"[G]asoline is still more affordable today than it was during the Kennedy administration."
"By June of this year, disposable income had risen by an average of $1,627 per person over last year's figures, according to the Department of Commerce, while the average person's real expenditures on gasoline increased by about $490. Our incomes are still outpacing gasoline price increases."
Basic Economic Law
One of the most basic laws of economics -- "the Law of Supply and Demand" -- says that when the supply of something decreases while demand remains the same, the price goes up. The federal government has been deliberately keeping the supply of gas from going up: no drilling, no refining. That is to say, the policies of the federal government have caused the price to go up -- because the supply is not keeping up with increasing demand for gas.
In a recent attempt to curb fears about rising costs at the pump, Republican senators have offered an amendment to their energy package under which every American taxpayer would get a $100 rebate check to offset higher gas prices. According to Cato scholar Tom Firey, "with gasoline prices soaring and consumers upset, the American political machine is preparing its standard response of bread and circuses. Politicians are calling for investigations into why the prices have soared, demanding windfall profits taxes on oil companies, and are demanding the breaking of Big Oil. ...It's all smoke and mirrors." Visit Cato's commentary on natural gas, oil, and gasoline for more information.
From time to time I receive letters which are churned out by a website which invites readers to send pre-written letters to politicians and candidates. Here is one such letter (on the left) with my comments (on the right):
Dear Mr. Craig:
We need to invest in renewable energy sources, not additional drilling.
The word "We" is one of the most important in American politics today. Who is "We?" Is the letter-writer an investment firm, or a mutual fund? Is the letter-writer including me in the deal? I personally can't afford to invest in "renewable energy sources." I barely have enough
money to pay for the gas to get to the "candidates' town hall." I can't afford any investments at all.
But if I had money to invest, I think oil looks more profitable than wind or solar.
Of course, the answer is, "We" is that special entity composed of politicians and special interests. Special interests go to Washington D.C. to have Congressmen take money from ordinary Americans and give it to the special interests.
74% of Americans want additional drilling. But "We" will take the money Americans want to invest in drilling and give it to special interests who want to make money off of "renewable energy sources."
The Free Market system is true democracy. Everybody gets to invest his own money wherever he wants. Every individual has choice. Private property is respected.
Congress has no right to take your investment dollars and invest them in corporations that make campaign contributions to the politicians.
As gas prices skyrocket and the peak of the summer driving season is upon us, many elected officials and candidates are demanding access to drill in the Arctic National Wildlife Refuge, off our coasts, and other sensitive areas.
Additionally, there has been an increase in drilling amendments added to bills in an attempt to open up coastal and refuge drilling to allegedly solve our nation's energy crisis.
Continuing our dependence on dirty fossil fuels will not solve our energy problems.
My "energy problems" would be solved if "dirty fossil fuels" were free. My problems would certainly be reduced if gas were cheaper. Does Congress have the right to take the money I am willing to spend on cheap gas and spend my money for me on fuels that 435 politicians think are better for me?
Is this not America any more?
Oil, gas, and nuclear companies have not been accountable to American taxpayers and are raking in record profits, while consumers and the environment suffer. In fact, oil and gas companies are only using 18% of the leases to which they already have access to drill. Proposing new areas to drill when companies are not drilling everywhere they have permission to underscores the immense greed of the energy industry.
First, businesses are not accountable to "taxpayers," or they shouldn't be, because their money should not be taken from them and given to "taxpayers."
Second, I'm not offended by "record profits." Profits only come to those who are selling the products that consumers want, and prices consumers are wiling to pay.
Oil companies are not stupid. They only drill where they think they are likely to find oil. They only drill where they think they are likely to find oil that they can bottle up and sell at a price that pays for the cost of exploring, drilling, refining, and shipping. Some forms of oil are much more expensive to produce. Is it "greedy" to not want to waste money by drilling for oil in places where it's too expensive to sell?
I urge you to invest now in renewable energy and commit to fully funding the Green Jobs Act and the Energy Efficiency and Conservation Block Grant.
Again, I don't have any disposable income to "invest." If the letter-writer is intending the letter to be read by a politician who will take money from people like me and use it on projects that benefit the letter-writer, the letter-writer should be ashamed.
It became common during the Clinton Administration to speak of government spending as an "investment." Congress might also therefore attach the following to each spending bill:
By voting for this legislation I hereby affirm my belief that the information and knowledge possessed by me and 434 other Congressman-"investors" is greater than the collective knowledge and information possessed by a Free Market of 150 million individual investors, pension fund managers, insurance company executives, mutual fund administrators, and brokers, all of whom do not have the luxury of obtaining investment funds by passing a law, but
must earn their investment dollars.
Oil companies are making large profits because they purchased the factors of production at relatively low prices and are able to sell their products for more than the company managers and the factor owners projected at the time of the agreement to sell.
However, record profits also mean better opportunities for recapitalization and new exploration.
by threatening to confiscate the oil profits, Congress is encouraging the industry not to invest in new capital and not to increase oil supplies.