Politicians, Democrat and Republican, are in a frenzy about gas prices. More in a frenzy, I think, than actual people are. They smell political blood; Republican blood. They all want to blame someone other than themselves for the problem.
"The president doesn't touch his friends at the big oil companies and it is nice that the president is finally talking about gas prices. But talk is cheap and gas isn't," says Senator Charles Schumer, a Democrat from New York.
"From 1986 to 2003, using 2004 dollars, the real national annual average price for gasoline, including taxes, generally has been below $2 per gallon," noted the Federal Trade Commission in a 2005 report absolving the industry of collusion. "By contrast, between 1919 and 1985, real national annual average retail gasoline prices were above $2 per gallon more often than not."
In other words, gasoline prices were lower than at anytime since 1919 for much of recent history. Some conspiracy! Maybe somebody should have been investigating consumers for "gouging" the oil companies.
But Mr Bray's point is that it is government that is really making the profits
While the average profit on the sale of a gallon of gasoline is nine cents, the average state and federal tax on that same gallon of gasoline is about 45 cents (and 52 cents in Michigan).
Forty five cents. Imagine if the price of gas suddenly dropped 45 cents tomorrow, which it could, if the Feds forewent their share.
Here in Vermont, the State tacks on another 20 cents per gallon. So we're up to roughly 65 cents per gallon in taxes in the State of Vermont just for taxes. I paid $2.95 for regular at the pump yesterday and if the taxes went away tomorrow, that would make gas $2.30.
Republicans, running for cover, have proposed giving a tax break of $100 a year.
Sen. Bill Frist, R-Majority Leader: "To help ease the pain that they're feeling at the pump."
How about you just lower the taxes on Gas? You're Republicans, right? Lower taxes and all that. Seems to fit.
The President announced his own plan to deal with the "issue".
The Bush gas plan calls for an investigation of market prices, a plan to promote fuel efficiency and boost domestic production and find alternative fuels.
The "investigation" will yield nothing and he knows it. But hey, it's politics.
Fuel efficiency? The market will take of that just as it did in the late 70's. Remember when all those high mileage Japanese cars ate Detroit's lunch for a while until it retooled? Like that.
Boost domestic production? Good luck getting around the environmental lobby who have many Democrats and some Republicans in their hip pocket. How many times has an Energy policy been up in front of Congress that proposed more domestic drilling and how many times have Democrats blocked the same?
What is the Democrat solution? More Taxes.
Pennsylvania Sen. Arlen Specter, chairman of the Senate Judiciary Committee, said a windfall profits tax, along with measures to stem concentration of market power among a few select oil companies, could offer eventual relief to consumers hurting at the gas pump.
Oooops. Did I call Sen Specter a Democrat? My bad. He just acts like one more often than not. That's not to say that real Democrats don't support the idea.
Sen. Carl Levin, D-Mich., said he believes gas prices "would come down within a matter of days" if President Bush told oil companies that he was going to support a windfall profits tax.
Right. Sen Levin must be too young to remember what happened the last time this was attempted.
The tax generated far less revenue than expected and actually trimmed domestic oil production when it tried a quarter-century ago.
From 1980 to 1988, the windfall tax brought in $80 billion in gross revenues - far less than the $393 billion projected - before it was abolished, according to an analysis released last month by the Congressional Research Service. It also lowered US domestic production, the analysis found, by somewhere between 1.2 percent and 4.8 percent during that period.
Counter intuitive you say? Perhaps. But the Democrats are the party of counter intuitive. They still can not grasp how it is that lowering taxes as Bush proposed could increase revenue, as it has.
"It had the effect that any economist would have told you. To believe the laws of economic gravity have changed over time is wrong," said Jerry Taylor, a senior fellow at the Cato Institute, a libertarian research center in Washington.
Yeah well most politicians today are acting as if the laws of economic gravity changed overnight. More demand means higher prices. Don't forget that India and China are now aggressively competing for Oil. Higher prices means people will use less gas, one way or another. Then the prices will get to the level where supply and demand are balanced. Everything else is smoke and mirrors.
One proposal I agree with is to stop giving oil companies subsidies. But I think all subsidies should be abolished so I'm not oil company bashing.
Strategically we need to reduce our dependence on foreign oil. And there are many ways we can do that. New technology, new drilling, more refineries, nuclear power, etc. But those environmentalists who are philosophically leaning Communist will fight that tooth and nail.
And there's a lot of them in the Party of Democrats.