Gas act really won't helpPosted Wednesday, July 2, 2008, at 12:27 PM
The cost of gasoline is providing a wonderful opportunity to make political hay. It's a classic example of how politicians will jump on the bandwagon of a current issue and push some pet policy.
One of the bills currently before Congress is the Gas Price Reduction Act of 2008. Don't believe it. Congress is great at coming up with wonderful names for bills, in part to disguise what they really are. Look at the No Child Left Behind Act. Great name. Horrible program. If they'd called the bill the Increased Federal Control Over Local Schools and a Massive Increase in Bureaucratic Paperwork Act, not too many people would have gotten behind it.
Now comes the latest great name -- the Gas Price Reduction Act. How could anybody be against that?
Easy. If you know what the bill actually does and are against those things.
Essentially, the current energy policies of the two parties fall into the two basic categories of supply and demand.
Republicans want to increase the supply of oil. That means opening up large areas for off-shore oil drilling, some Alaskan wilderness, and attempting to exploit the oil shale deposits of the Green River area (using a relatively new technology that is worth it only if oil prices stay high).
The Democrats want to reduce demand. That means Americans cutting back on their driving and other energy-intensive habits, with incentives to do so either based on increased taxes in some areas or tax credits in other areas. Great idea in theory, or if you live in a big city with good mass transportation available, but for anybody who commutes to Boise for work, and there are a lot of them here, there isn't much real capability to back down significantly on their driving. How can you possibly penalize a person who has no choice?
So you can pick your poison (roll over for big oil, or change your lifestyle). In truth, we probably need something resembling a combination of the two policies.
But don't let the fancy title of this GOP-backed bill fool you. It won't do what it infers it will.
The bill comes in basically four parts. The first two essentially call for a massive increase in areas available for oil explorations -- offshore, ANWR (the Arctic National Wildlife Refuge) and the oil shales of the southwest. This would increase supplies and reduce dependence on foreign oil.
The third part provides some funds for research and development of better electric car batteries, and some loans for people to build manufacturing facilities for those batteries. It doesn't say how much, but when the appropriations bill for this comes around I doubt if they're going to throw a lot of money at it.
Fourth, it directs the Commodity Futures Trading Commission to study the regulation of commodities markets around the world and to gather some information of certain classes of traders. Great, another government study.
But, it has everything in it its supporters will tell you, increased production of oil from domestic -- not foreign -- sources; money for the very green electric car technology, and "action" against the speculators that have driven up the price of gas.
Speculators haven't helped, but the price of oil essentially is going through the ceiling because of rapidly growing demand in India and China, where an exploding middle class is looking to fill that two-car garage. Demand keeps going up faster than supplies can possibly match, therefore the price of gas will stay high and easily could go higher.
And an electric car technology (which I've endorsed over the years) is still a long ways off -- at least two decades -- and would require literally hundreds of billions of dollars to convert our economy to electric transportation (roughly what we're spending on the war in Iraq, now).
And then we come to expanded supply. I don't have anything in particular against that. I think the industry has gotten a lot better about developing environmental safety precautions against spills, for example. Still, people can argue the pluses and minuses of opening those lands either way.
But if you think it's going to reduce the price of gas in anything resembling the near future, forget it.
If those areas were opened for drilling today, you'd be lucky if they were producing oil by 2017, and most experts appear to think 2020 would be the earliest you could start seeing that "new oil" hit your gas pump. In addition, the most liberal estimate I could find was that once it started flowing it would reduce the price at the pump by about three cents a gallon. THREE CENTS! Max! Most estimates were closer to two cents a gallon.
Don't get me wrong. The provisions of the act are worth public debate. There are some genuine and valid issues involved in this proposed bill. And it will be a classic debate between the vastly different Democratic and Republican positions.
But don't let the name of the act fool you. Anyone who opposes the Gas Price Reduction Act isn't opposed to reducing gas prices, simply the method by which that will be achieved. This proposed law could just as easily have been called the Let Big Oil Drill Almost Anywhere Act, which doesn't mean that's necessarily a bad thing, but while accurate, doesn't sound so good. Would you support an act with that name if you didn't know the details of it? So why support one with a "nice" name until you know the details of it.
The name of the bill is pure window dressing. It doesn't reflect at all what it hopes to do. Don't get fooled by the rhetoric.
None of its provisions -- or for that matter any alternatives currently being proposed by the opposition -- are going to do a thing to bring down the price of gas -- either significantly or within the next decade at least.
If you want to bring down the price of oil, convince everyone in India and China to give up their cars so we can keep ours.
In the meantime, the next president is almost certainly going to be facing a major recession at the least, as inflation in basic living expenses (gas and food whose costs are tied to the price of gas) rapidly eats up what little disposable income most Americans have these days.
Maybe the candidates should be talking about how they're going to put more dollars back in our pocket, or help the dollars we earn now have more buying power. I hate to do it, but let me quote Bill Clinton: "It's the economy, stupid."
Let's not get distracted by fancy names for something that won't kick into effect for decades. And we're going to have to accept that the price of gas isn't going to go down in our lifetimes.
So what else can the candidates offer to stop the hemorrhaging from our pocket books? That's the real question. The rest is window dressing.
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