There’s no way to put this politely. Raising taxes on U.S. oil companies and calling it an energy plan is just about the dumbest idea the Democrats have come up with yet.
Democrats call it “a windfall profits” tax, and it is at the heart of their plan to deal with punishing oil prices nearing $140 a barrel and skyrocketing gas prices that have crossed the $4-a-gallon threshold at the pump.
Their proposed tax increase will not produce a drop more oil. In fact, it will reduce supplies. And it will not lower oil prices, either. It will make oil more expensive, because oil company costs would rise as a result of higher taxes.
Republican Sen. Kay Bailey Hutchison of Texas called the bill that Democratic leaders recently brought to the Senate floor “a pathetic attempt to even call itself an energy plan.”
Democrats seem to have a problem with what they deem to be “windfall profits” only when it comes to oil. Farmers are raking in huge profits from corn to make ethanol, with heavy federal subsidies to boot. But there are no demands from Nancy Pelosi or Barack Obama to slap corn growers with higher taxes to confiscate their earnings, even though the environmental ethanol craze has been driving up the cost of bread, cereal, meat, poultry and just about everything else we eat.
The legislation Democrats proposed did not pass the laugh test. Besides its windfall profits tax, the bill suggested that the United States sue the Organization of Petroleum Exporting Countries (this is the way litigious lawyers in the world’s most deliberative body think) and called for yet another federal commission to look for price gouging.
But as Mrs. Hutchison said, “It does not produce one ounce of energy. Not one ounce.” Common sense suggests we need to produce more fuel, but this bill was on empty, and mercifully, the Democrats failed to muster the 60 votes needed to end debate on the bill.
Someone once said the definition of crazy is doing the same thing over and over again but expecting different results. The same could be said of the windfall profit zealots.
Congress passed a windfall profits tax in 1980. Mrs. Hutchison reminded the Senate what happened: “It increased our reliance on foreign oil for our energy needs, it exported jobs overseas,” and “it increased the price of oil,” she said. It was such a disaster that Congress repealed it.
Ronald Reagan then came into office and changed our energy policy. We deregulated the industry, drilled more oil wells, turned on the oil spigots, lengthened the pipelines and produced our way out of supply shortages. The price of oil fell, and gas was once again plentiful and inexpensive.
Other senators came forward last week to say much the same thing about this terrible bill. Sen. Bob Corker, Tennessee Republican., a member of the Energy and Natural Resources Committee, said it would do “nothing to lower energy prices or improve our energy security.”
When Mr. Obama or his supporters talk about energy, they never breathe a word about “production,” that is, increasing the oil and gas supply to bring down prices. Mr. Corker, applying a little Tennessee horse sense, told his colleagues we need more “oil and gas production” and gasoline “refinery capacity.” Exactly.
These were the core elements in the Republican alternative bill offered by New Mexico Sen. Pete Domenici: expand oil refineries to boost gas inventories, open up the Arctic National Wildlife Refuge to safe, surgical drilling and give states the option to explore off their outer continental shelf and reap the royalties.
Republicans once passed legislation to drill in ANWR, but President Clinton vetoed it in 1995. Had he signed it, Mrs. Hutchison said, “we would be pumping the same amount of oil that we import from Saudi Arabia every day, and we would not [be paying] $4 a gallon at the pump.”
Why are we in this mess? It isn’t because liberal Democrats have the support of voters on this. A Gallup poll found 57 percent of Americans support “drilling in U.S. coastal and wilderness areas now off-limits.”