Sunset News: From Heritage

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Friday, August 08, 2008

From Heritage

How not to Lower Gas Prices

From Heritage

All too often, the left sees government as the solution to today’s problems.

For example, liberals in Congress have long supported misguided policies that would make energy more expensive—in the name of making it more affordable, of course.

Just this week, Sen. Barack Obama (D-Ill.) outlined several big-government measures to deal with record-high energy prices. Most of these policies are non-starters, as Heritage Foundation energy expert Nick Loris explains.

  • Energy “Rebate.” One proposal is to give individuals $500 or families $1,000 of taxpayer money to offset the cost of energy. Such a policy “would reduce supply, increase the demand for gas, and rely on windfall profits taxes on big oil, which have been tried and failed miserably.”
  • Tapping the Strategic Petroleum Reserve. Another plan would sell oil from America’s Strategic Petroleum Reserve. While “an extra 3 million to 4 million barrels per day would lower prices” somewhat, the SPR is of limited size and could “maintain that pace for no more than six months.” The plan could also impact our national security, as reported on Heritage’s blog, The Foundry.
  • Cracking Down on Speculators. Even though peculators aren’t at the root of high energy prices, another “solution” would impose new restrictions on their investment activity. “Ultimately, speculators do little to affect supply and demand.”
  • Capping-and-Taxing. The proposal to curb greenhouse gases with new regulations and taxes is also unhelpful. A similar proposal “would have imposed a $4.8 trillion hit to GDP by 2030 and nearly 1 million jobs lost in certain years.” And it would raise prices at the pump.
  • Renewable Fuels Mandates and Fuel Economy Standards. Imposing mandates for the use of renewable energy sources has already proved a failure. For example, the ethanol mandate that has made both gasoline and food more expensive.

Fortunately, many liberals seem to be coming around to the common-sense solution: open up America’s vast domestic energy supplies to exploration and extraction. Some liberals have offered lukewarm support for limited offshore drilling. Nevertheless many on the left remain adamantly opposed to opening up ANWR in Alaska, which is estimated to contain ten billion gallons of recoverable oil.

Conservatives push for expanded drilling

While some liberals are now open to domestic energy exploration, many are not, and Congress left for its summer recess without voting on offshore drilling.

Citing recent estimates, Heritage energy expert Ben Lieberman reports that off-limits coastal areas contain “19.1 billion barrels of oil and 83.9 trillion cubic feet of natural gas—approximately 30 years’ worth of imports from Saudi Arabia and enough natural gas to power America's homes for 17 years. It should also be noted that these initial estimates tend to be low.”

Even though Congress is formally on recess—the lights are off in the House of Representatives and the C-SPAN cameras are off—several hardy conservatives remained in Washington to press for a vote on offshore drilling. An amateur video of the informal proceedings on the House floor has been posted to Heritage’s Foundry weblog. Heritage’s Rob Bluey reported from the scene that “the debate is going to continue all week on the House floor.” Follow his reporting on Twitter.

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