• Energy policy: boiled in oil
Energy policy: boiled in oil
St. Louis Post-Dispatch, Friday, Nov. 1
It was hard for anyone who has watched gasoline prices spike not to take real pleasure in seeing five oil company CEOs hauled up before Congress for a public grilling Wednesday. After all, these are the guys who cash in when gasoline hits $3 a gallon.
Senators, mindful always of the TV cameras, had the hot seat all warmed up and ready for their unhappy guests. Sen. Barbara Boxer, D-Calif., pointed to a chart showing the millions of dollars in salaries, bonuses and stock awards reaped by the oil chiefs. “Working people struggle with high gas prices,” she said. “And your sacrifice, gentlemen, appears to be nothing!”
But while it was a satisfying performance, no one seriously expects it to produce energy legislation.
As we’ve said before, a windfall profits tax or price limits on gasoline now would do the economy – if not our personal pocketbooks – more harm than good. On top of high prices, we’d have gas shortages.
There have been a few cases of gouging at individual gas stations. But there is no evidence that oil companies are colluding to drive up prices. Oil hit $69.81 per barrel in August, mainly because world demand for oil was right at the limit of the world’s ability to pump it. That makes prices volatile. Then hurricanes took Gulf oil wells off-line.
Prices are down to $57 a barrel today largely because high prices prompted Americans and Chinese to conserve, easing the oil market’s case of the willies.
In the long run, the key to cheaper gas lies in conservation and innovation.
That includes personal sacrifice; tougher federal fuel efficiency standards; investment in mass transit; redesign of vehicle engines, appliances and power plants; and accelerated development of alternative fuel sources.
Until we get there, it also requires more drilling to increase supply, and investment from the oil barons in more refineries. Tax away the profit and you lessen the incentive to drill and build.
Apply a price cap, and you will encourage people to burn gasoline until the supply runs low.
None of this is meant to diminish the real pain that higher energy prices cause the working poor to whom Sen. Boxer was referring. Reporter Marianna Riley described that plight in Sunday’s Post-Dispatch. She told of the Berendt family — husband, wife and three small children. They are living in a shelter, in part because Larry Berendt must fill up his tank with gas three times a week to drive to his $8.50 per hour job at a Silex nursing home.
At Wednesday’s hearing, senators suggested that oil companies donate some of their fabulous profits into a federal program that helps poor families pay their heating bills. No dice, said Big Oil.
“We feel it is not a good precedent to fund a government program,” said James Mulva, chairman of ConocoPhillips.
In Wednesday’s performance at the Senate Theater, James Mulva was typecast: Scrooge.