The Rise of Energy: Senate Democrats Are Failing America
Senate Democrats led by Sen. Harry Reid are failing Americans on energy.
The Majority has been busy talking about oil as of late. Are they working on tax incentives for oil companies to enhance exploration? Are they reducing environmental or other regulation on oil corporations? Are they opening up known areas where oil exists off our shores in ANWAR and in other locations? NO.
Instead they’ve decided in their infinite wisdom to impose a “profits tax” on oil companies… The tax rate would be 25% and would apply only to those profits deemed unreasonable and
“only if those profits are not reinvested in expanding refinery capacity or renewable energy sources, according to a summary of the proposals.”
But don’t worry, the tax would only last 2 years…
How does this help the growing gas price crisis? It doesn’t. And of course, it’s not supposed to.
What it does do is encourage consumers to channel their frustration at the oil companies for — horror of horrors — making a profit (you know, the aim of every corporation). Since Democrats could conceivably control 2 branches of government with the election of Obama this fall, Senator Reid has begun a Marxist campaign of demonizing oil corporations. It’s a failure of an electoral strategy of course because most people understand that no matter how high demand and prices go, oil companies will still be selling us our oil….and they need their profits to put money into finding more oil. That’s what OIL companies do Mr. Reid.
This is simple economics. The market for oil is like other commodity markets. When the supply and demand curves intersect, there you have your price. For years, we’ve seen increases in the price of gasoline because the supply of oil has shrunk while demand has grown.
So, what does expanding refinery capacity - as Harry Reid would have it - do for the gas price? NOTHING AT ALL. Why? Because, expanding our ability to refine oil into gasoline does not increase the supply of oil. Only drilling in ANWAR and offshore and recently in North Dakota and other areas will increase the supply. As the supply curve expands even with the expanding demand curve, only then will we see some stability in the market. At some particular price, the market will cool off, but I would think $4.00 a gallon by the end of the summer is a pretty safe bet.
Sen. Harry Reid is playing politics. He’s not offering any solution whatsoever. He’s failing America and we’re paying for it.
And as long as voters put Democrats in charge, my prediction is that we’re going to continue to pay for it. They simply don’t understand and ignore the fundamentals of our market-based economy.
Somewhere Milton Friedman is ordering a scotch straight up.
Filed under: 2008 Elections, Democrats, Energy, Environment, National Politics
