With gas prices at uncomfortably high levels, politicians have been trying to make political points off them.
Democrats say that greedy oil companies are responsible while Republicans say that supply and demand govern energy prices.
Simple economics suggest that Republicans are right.
But with the Democrats in control of Congress, guess which philosophy is guiding legislation?
In a multi-faceted energy bill, Senate Democrats want to give about $12.6 billion in tax credits over the next 10 years to things such as wind power, electric cars and so-called biomass fuels.
This, despite the fact that government has already tried supporting alternative energy sources—remember Jimmy Carter’s synfuels (or “sinfuels”) program?—and found them wanting. When the government support dried up, consumers found that it was too expensive and rebelled.
So this does little to affect gas prices. But wait, it gets worse.
The Democrats’ energy bill also increases taxes on oil companies to the tune of $14 billion over 10 years.
Hasn’t anyone on the Democratic side taken Economics 101? Businesses don’t pay taxes; they pass them on to the consumer.
Now that you know what the bill does, you should also know what it doesn’t do:
- The bill doesn’t push for more refining capacity to handle more demand.
- The bill doesn’t open up known oil fields in the United States, such as a sliver of land in the Arctic National Wildlife Refuge.
- And the bill doesn’t do anything about the 18.4 cents a gallon in federal gas taxes that all consumers must pay.
One thing the bill does do is require carmakers to produce cars with better gas mileage. These increased fuel efficiency standards will lead immediately to smaller and lighter cars, which every study ever done shows are less safe than larger cars and SUVs.
So will this bill lower gas prices?
No, the only thing this bill will lower is Congress’ approval rating—if that’s possible.