Senate Dems Counter-Pander

grist.org

Senate Democrats have just proposed a new energy bill: the Consumer-First Energy Act. It is meant as a response to the Republican bill introduced last week, which R's are currently trying to pass as an amendment to the flood insurance bill.

Now, the Republican bill -- the Drill, Drill, Drill Bill -- would be incredibly destructive and do nothing to solve short- or long-term energy problems. That's a given. It's important to block it, and I understand that Senate Dems think they need a positive alternative of their own.

Obama showed last week how you can offer a serious alternative to political gimmicks and be rewarded for it. It appears his Senate colleagues didn't learn the lesson. The bill they threw together is a lame piece of pandering, just as silly in its own way as the McCain/Clinton gas tax holiday.

I'll get into the details below, but the main problem is not in the details, it's in the three underlying premises:

• High gas prices are attributable to short-term market quirks and oil industry perfidy;
• it is possible for Congress to meaningfully lower the prices of gas; and
• low gas prices are a proper target for public policy.

Each of these premises is false. Oil prices are rising because production is flat and demand is rising. Production is going to stay flat, or decline. Demand is going to keep rising. Ergo, gas prices are going to keep rising. So in the unlikely event the bill is passed, it would address a problem that's not really a problem, which couldn't be solved if it were a problem, in a way that does not address the real causes of the problem-that's-not-a-problem. Quite the legislative trifecta!

Look: you can't promise Americans you're going to lower the price of gas. It's a lie, and they're going to notice when prices don't go down. It might help you tactically in the short-term, but in the long-term it's going to come back and bite you on the ass. Gas prices are going to keep going up, and good leadership begins with honesty.

Now to the details. Here are the main proposals:

• Roll Back Tax Breaks for Oil Companies and Invest in Renewable Energy

1. Force Big Oil to Pay Their Fair Share through a Windfall Profits Tax
2. Halt Government Purchases of Oil for the Strategic Petroleum Reserve
3. Protect Consumers from Price Gouging
4. Stop Market Price Speculation
5. Stand Up to OPEC

That first plank is great. It's the same thing Senate Dems have tried thrice now, unsuccessfully. It's unlikely it will pass this time either, though I admit to taking some satisfaction in seeing R's going on record against renewable energy yet again. The only worry here is that Dems are holding the renewable energy tax credits -- the PTC and ITC -- hostage. They need to pass those, now, by any means necessary -- millions, possibly billions of dollars and thousands of jobs are on the line. As long as they have other plans to get the credits passed, then this bit of theater seems fine.

But the other planks are just dumb.

1. Why should Congress be in the business of telling industries how much profit they're allowed to make? Is that a good precedent? Just eliminate the subsidies we offer oil instead. That's a bigger pot of money anyway.
2. This might briefly shave a half-percent of oil prices, a blip that would unnoticeable among the larger structural forces at play.
3. Where is the evidence of price gouging? This is a silly lefty conspiracy theory and it's risible for national Dems to be indulging it.
4. It's likely prices are slightly inflated due to futures speculation, and I'm all for better regulation of trading, but again, this is a blip.
5. OPEC owns the oil. It's under their ground. Who are we to dictate to them what they do with it? Regardless, they're pumping as much as they can. It's to their immense benefit right now to drive up supply, but they aren't. Why? They can't. It's called peak oil, and it's time for politicians in America to get a damn clue about it.

For decades, energy policy in this country has been predicated on the lie that cheap energy is an American birthright. It's not. The era of cheap energy is ending. Perhaps a politician or two might try finding out what happens when you treat voters like adults and tell them the truth. It's so crazy it just might work.

Comments

[KillTheMessenger]

The problem is not even Congress. The problem is in the heads of almost three hundred million Americans who can not imagine a lifestyle change at any cost. Of course, the changes they will have to make are not even that frightening, but the psychological barrier is still to high for most to take. Europeans at this moment are paying $8-$10/gallon of gas and they live. Of course, far more than half of that money stays in Europe and actually helps to even out the budgets. In comparison Americans do not enjoy such a fiscal upside of rising energy prices and in the days of tax gifts to everyone who does not need them this must be a very depressing prospect.

Let's just say that reality is a very harsh teacher and will teach a whole generation of Americans a brutal lesson or two. We will come out of it as better people. Not as the richer people, for sure, but as the better people. And that, I believe, is an old American myth, that this country is good. So now it has a chance to get even better. It might just hurt a little.

[Cjwirth]

Accelerated oil drilling is not the answer, as it will accelerate oil depletion, which is out biggest enemy. So called renewable or alternative energies are not the answer either, as they use up lots of fossil fuels in their development, manufacture, installation, and maintenance, and they only give us electric power which is not what we need. Soon we go into global recession and we will have surplus electric power as businesses fail. We need liquid fuels for planting, harvesting, and transporting food. Also, we need oil and natural gas for home heating. When these are used up, it's the end. It is all explained here: http://www.peakoilassociates.com/POAnalysis.html

[KillTheMessenger]

Alternative energy is very much the answer, it just not the praised biofuels but wind and solar, and probably a not too small portion of new nuclear energy.

[liberalghost]

"....Why should Congress be in the business of telling industries how much profit they're allowed to make? Is that a good precedent? Just eliminate the subsidies we offer oil instead. That's a bigger pot of money anyway...."

What a stupid argument. Remember when "entrepreneurs: in post-Katrina New Orleans were selling clean water at $20-$30 gallon? When you have a product others can not live without, nor substitute for, price limits may be necessary. Especially when the seller has no ethics.

You might enlighten us on what the CEO of ExxonMobil did to qualify for a 400 million dollar pension.

[KillTheMessenger]

The CEO of Exxon realized that he had an enormous number of suckers for customers. And that, is the very best business model there is.

[timm0]

Dead bang on.

I think a "windfall profit tax" is a cop-out though. The industry is a collusive gang of crooks. They should be "fined" for price gouging and manipulating the energy market - not "taxed."

[bgregs]

You're wrong on one point. Demand is NOT rising, demand is basically flat!

[KillTheMessenger]

You mean demand in the US is flat. Demand in China, however, is rising. Production is flat, which is essentially pricing out large numbers of consumers. First goes the developing world (it is more or less gone by now), then the poor in countries like the US. People with a little bit of foresight (like those of us who own a Prius or any fuel efficient European car) and well balanced budgets can easily afford $20/gallon. And since the price of fuel is the price that the richest amongst us can afford, that is where the price is headed in Europe. In the US it will probably stabilize somewhere around $10-$15/gallon (including increasing gasoline taxes). That's still not more than 25-30cents/mile in a Prius. Big deal, not.