21

Jun

by Moonage

Steve Forbes is all undone about the political posturing of several members of Congress who are making claims they’re gonna fix the price of oil. Here’s a couple of snippets:

First up is to outlaw “price gouging,” which they allege is behind the run up in prices – never mind the rise in the price of crude oil on the world market and other market forces. Ignoring the fundamental laws of economics, as they often do, Congress wants to criminalize the law of supply and demand and keep the specter of criminal penalties hanging over the industry. Every investigation by the FTC and by state and local officials has concluded that there is no evidence of gouging or manipulation…..

More worrisome are the various tax proposals coming out of the economic geniuses in Washington. Every increase in gas prices or positive profit announcements from energy companies is met with a call for more taxes on the industry despite the fact that oil companies already pay more in taxes than most other corporations. According to the Tax Foundation, the “average effective tax rate” on oil companies is nearly 39%, compared to 33% for other industries. The reality is that increased taxes and regulation creates an environment for less investment, which means less production and higher prices…..

The rise in prices at the pump causes real pain for consumers and has the potential to negatively impact our economy. The last things we need are posturing politicians, price controls and punitive tax hikes – all of which harm consumers and undermine energy security.

Now, I tend to agree with every single word Forbes utters there. It makes absolutely no sense at all to add expenses to the cost of oil in an effort to lower the price of gas. None. All you all are hearing is pandering and rhetoric. I hate pandering and rhetoric. What we need is to encourage other alternative sources of fuel in a major way instead of just falling back on the oldest political ploy in the books, taxing. Rather than adding to the expenses of oil use, we need to be giving SERIOUS breaks to those who don’t use oil. Not a $1500 tax break for using a hybrid vehicle. The problem there is most people who need it most can’t afford to buy a new car in the first place. The trick in my opinion is to provide tax incentives on the purchasing of the fuels that it takes to run these hybrids. If you have a hybrid running on ethanol or diesel, get about a 50% deduction on your taxes. Make it worth businesses and individuals’ trouble in the long run to buy hybrids.

Of course, the obvious drawback here politically is that is taking money out of the hands of those people pandering to the public by making the case that giving them more of your money would solve the problem magically. It never has, and it never, never, will. Don’t fall for this rhetoric. Look for a real answer. The only magic bullet is not lowering the price at the pump, it’s lowering the cost. The only way to do that is to lower demand. Period.

And if you hear your Congressman promising to lower the cost by raising the expenses, tell him to come here so I can set them straight. Or, better yet, next time vote for someone who understands the very basics of supply and demand.

That’s all I have to say about this today.

Tags: , , , , , , , Filed Under Energy Policy, Oil Policy, Political Correctness 

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  1. Moonage Political Webdream » Blog Archive » Clean Energy Act of 2007 on 06.22.2007

    [...] or may not, ever be used to deal with our future energy needs.? At least they didn’t get the brilliant idea of adding taxes to help us deal with these high prices to [...]

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