Gas Tax Nonsense and Fundamental Energy Industry Change
The idea being promoted by both John McCain and Hillary Clinton of canceling the federal gasoline tax for the summer is a terrible idea. It fails to address the real issue of runaway fuel prices. It has negative consequences for the safety of our roads and bridges. It is essentially a campaign stunt and distraction. The oil profiteers have already gobbled up any benefit consumers might gain from the cut far in advance of the proposed summer suspension.
Runaway fuel prices are largely the result of market manipulation by speculators and oil companies combined with a “nod and wink” approach to government regulation and law enforcement from the Bush Administration. We need serious government intervention instead of cosmetic window dressing.
Gasoline inventories are rising at the same time that prices are skyrocketing! Oil companies have been intentionally closing refineries to raise prices. The Bush administration has been taking huge quantities off the market by continuing to fill a strategic reserve when the federal government should be releasing the reserve to drive down the prices and breaking the power of speculators.
The federal taxes on fuel are a very tiny percentage of the total price. Gasoline prices rose nationally last month by nearly twice the amount of the federal gas tax. While the suspension of the gasoline tax sounds good, it does nothing but slow the price rise for a couple of weeks while gutting our ability to maintain our roads and bridges.
We already have bridges collapsing and citizens dying. Our transportation safety issue is really important. It is already in a crisis situation without following this irresponsible proposal. We need a huge increase in transportation infrastructure spending by the federal government instead of a dramatic decrease. We need to spend hundreds of billions of dollars over the next few years on rebuilding our national economic infrastructure. We should be training millions of new construction workers by giving our construction unions support for their apprenticeship and training programs. The money has to come from somewhere.
McCain and Clinton are pushing a proposal that is irresponsible and will not even occur under their terms if elected. Neither will be in the White House this summer.
There are some ideas that will help. Aggressive investigations and prosecutions in the oil industry are certainly in order. Illegal price manipulation is likely. Strengthening laws and penalties for market manipulation should be a top priority. All profits derived from illegal market manipulation should be surrendered to the federal government along with huge additional penalties. The law should immediately be changed to make this the standard.
All oil imports should be done through the federal government. The federal government should negotiate the price from a position of strength. Oil companies should not be able to drive up prices by bidding against competitors for imports and using the process as an excuse for price-gouging.
We need a strong “windfall profits tax” on the oil industry. This tax should be used to promote alternative energy and to subsidize the trucking industry fuel costs, which is driving up consumer inflation on other products like food.
Oil refinery closings should only be permitted by the federal government when they do not result in huge price increases. If necessary, the federal government should build their own refineries to supply the American military and feral government vehicles. We should end the Iraq War which is wasting huge quantities of fuel needed by the homeland.
If all else fails, the federal government should consider price controls on fuel and/or nationalizing the oil industry. The oil industry cannot be permitted to control the entire American economy for the benefit of the very, very few.
McCain and Clinton should stop playing politics with the gas tax issue. They should be aggressively pushing for alternative energy solutions like solar, wind, conservation, bio-fuels, Green jobs and technology along with much more federal regulation of the oil companies.
Written by Stephen Crockett (host of Democratic Talk Radio http://www.DemocraticTalkRadio.com and Editor of Mid-Atlantic Labor.com http://www.midatlanticlabor.com). Mail: 698 Old Baltimore Pike, Newark, Delaware 19702. Phone: 443-907-2367.
Feel free to publish at no charge without prior approval.
Runaway fuel prices are largely the result of market manipulation by speculators and oil companies combined with a “nod and wink” approach to government regulation and law enforcement from the Bush Administration. We need serious government intervention instead of cosmetic window dressing.
Gasoline inventories are rising at the same time that prices are skyrocketing! Oil companies have been intentionally closing refineries to raise prices. The Bush administration has been taking huge quantities off the market by continuing to fill a strategic reserve when the federal government should be releasing the reserve to drive down the prices and breaking the power of speculators.
The federal taxes on fuel are a very tiny percentage of the total price. Gasoline prices rose nationally last month by nearly twice the amount of the federal gas tax. While the suspension of the gasoline tax sounds good, it does nothing but slow the price rise for a couple of weeks while gutting our ability to maintain our roads and bridges.
We already have bridges collapsing and citizens dying. Our transportation safety issue is really important. It is already in a crisis situation without following this irresponsible proposal. We need a huge increase in transportation infrastructure spending by the federal government instead of a dramatic decrease. We need to spend hundreds of billions of dollars over the next few years on rebuilding our national economic infrastructure. We should be training millions of new construction workers by giving our construction unions support for their apprenticeship and training programs. The money has to come from somewhere.
McCain and Clinton are pushing a proposal that is irresponsible and will not even occur under their terms if elected. Neither will be in the White House this summer.
There are some ideas that will help. Aggressive investigations and prosecutions in the oil industry are certainly in order. Illegal price manipulation is likely. Strengthening laws and penalties for market manipulation should be a top priority. All profits derived from illegal market manipulation should be surrendered to the federal government along with huge additional penalties. The law should immediately be changed to make this the standard.
All oil imports should be done through the federal government. The federal government should negotiate the price from a position of strength. Oil companies should not be able to drive up prices by bidding against competitors for imports and using the process as an excuse for price-gouging.
We need a strong “windfall profits tax” on the oil industry. This tax should be used to promote alternative energy and to subsidize the trucking industry fuel costs, which is driving up consumer inflation on other products like food.
Oil refinery closings should only be permitted by the federal government when they do not result in huge price increases. If necessary, the federal government should build their own refineries to supply the American military and feral government vehicles. We should end the Iraq War which is wasting huge quantities of fuel needed by the homeland.
If all else fails, the federal government should consider price controls on fuel and/or nationalizing the oil industry. The oil industry cannot be permitted to control the entire American economy for the benefit of the very, very few.
McCain and Clinton should stop playing politics with the gas tax issue. They should be aggressively pushing for alternative energy solutions like solar, wind, conservation, bio-fuels, Green jobs and technology along with much more federal regulation of the oil companies.
Written by Stephen Crockett (host of Democratic Talk Radio http://www.DemocraticTalkRadio.com and Editor of Mid-Atlantic Labor.com http://www.midatlanticlabor.com). Mail: 698 Old Baltimore Pike, Newark, Delaware 19702. Phone: 443-907-2367.
Feel free to publish at no charge without prior approval.
Let's keep the pressure up on the business elite and their lobbyist pals.
Wonderful post!!!!
Take care,
Ray
Look- I agree that the oil companies could have done a lot more to move towards that transition- the redefinition of themselves as energy companies and generation of power from alternate sources.
But here's the deal. China is doubling its economy every 7 years, and their population dwarfes ours. They aren't alone. India and many countries of the third world are rapidly industrializing and they want oil for their cars too.
Gas is already $8 per gallon in europe, and this is just the beginning.
It's no doomsday scenario- it is just good old supply and demand. Oil is a finite source and whether we reach peak oil (Link ) this decade or next, when we reach that point, production will decrease as demand is skyrocketing due to these new demands.
So this goes way beyond the oil companies. We could have a completely ideal management of oil companies (pick your model), and we would be in the same square one.
Yes, We Can build our way out of this, but guess what. We will need the expertice of large organizations that can undertake very large and expensive building projects. Guess who those organizations are. You got it. The energy companies.
So rather than demonize them for populist political gain, let's realize that we are in a stituation like the politics prior to WWII- split between the leaders of industry that feared the president was a rabid socialist, and a great president frustrated at the reluctance of industry to deliver economic benefits for its citizens. When the nation was threatened, these same leaders of industry fell into line and within 6 months our factories were turning out tanks, ships at a production rate never seen in the history of mankind.
Short-term and medium term concerns require much tighter regulation of the oil industry. Long-term, we do need to move to other forms of energy and my column states that fact.
Oil companies are probably not the best vehicle for developing quickly solar, wind, bio-fuels or conservation programs. They are not the leaders in that technology and have profit motives to stand in the way of rapid progress.
Knocking populism is a favorite theme of corporate America and the Bush Republicans. It is right up there with demonizing labor unions and promoting falsely named "free trade" deals that are undermining our national security and standard of living.
Neither Clinton or Obama go far enough.
McCain does absolutely nothing but get us deeper into this crisis. Bush does it only slightly quicker. Both are tools of the oil industry.
As several democrats have said the republicans have put america in a ditch and sometimes you need a little more power to get out of a ditch. So while spending 5k a second to line the pockets of the oil companies and war profiteers, we should be able to give the poor guy at the pumps 13 cents a gallon.
Do you believe that if the oil industry were somehow better regulated that the oil economy would somehow escape the fact it is fundamentally doomed?
Without taxing the value added, like Clinton proposes with the tax holiday, the pluralism we need to control profiteers--a free market--will not obtain. The other choice is nationalization, or another form of consolidation that is no assurance of added supply with added value.
Very best wishes.
Pluralism in an odd context. Is there an intended juxtaposition with populism- If so, what?
Certainly consolidation is a disincentive to market efficiency, and there is no question that oil companies have taken actions to maximize their profits, and this includes reluctance to increase supply when it is not in their economic interest to do so.
Yet the current administration of oil men have taken a variety of actions aimed at increasing supply- such as a 500 billion enterprise in Iraq, and attempts to open Arctic National Wildlife Refuge (ANWR) drilling.
If the goal is to increase supply for the immediate future, then regulatory schemes are really just scratching the surface. If you want an exclusive on supplies for the US, then permanent bases in Iraq, a nuclear umbrella guarantee to UAE/Saudi Arabia/Kuwait (as Clinton proposed) and opening up drilling in ANWR.
Sorry, but all of that is just delaying the inevitable.
Better to spend the resources on energy independence. Let the oil companies compete with electric vehicles.
To the consolidation point- I'd be perfectly happy to bar them from generation so they don't lock up that market too. There is sense in that, I suppose.
Perfectly clear.
This sector has undergone consolidation. The result is a predictable reduction of supply to maximize profit on an inelastic demand curve.
Financing the comeptition, and adding supply, is rudimentary economics cartels want us all to forget. A competitive marketplace IS pluralism.
Consolidated entities do not tend to finance either within or across sectors. However taxing the value they add to finance pluralism of the marketplace will add supply by reducing the incentive to protect the value of reserves by mere consolidation of its ownership or, pluralism.
Very best wishes.
My critique stands unanswered: Increasing market efficiencies is an irrelevant response if the supplies of oil are controlled by our adversaries or in environmentally sensitive areas.
I was just talking to someone about prices in Vegas alone. It is way more expensive than it was 3 years ago and that is just for the room alone, not food or entertainment (which also costs an arm and a leg).
For those that live in a small area or a well established commuter system area, the gas price is great - it drives you to use public transportation. But for those of us who have long commutes with no public transportation available, there is little we can do besides finding another job - in these areas jobs are spread out and not all congregated in a downtown setting (where there is usually public transportation to). I little bit of savings does help, in the meantime.
All of your ideas are great but will take a long time to get passed and A LOT of fighting to go through (all of that money means they have an arsenal of attorneys and lobbyists). What about in the shorter term? Ideas like mandatory telecommute days (1-2 days a week) for those that can, or removing congestion during rush hour (no tractor trailers so heavy consumption vehicles don't sit in traffic), or mandatory flexible times for office hours, or help for buying gas saving cars.
And those ideas don't have to be implemented everywhere. Only places that are more affected by the gas prices.
And even if Clinton/McCain got an abundance of alternate resources passed today, to copy your point, it wouldn't go in until well past their terms.
Telecommuting...yes!
Greedy real estate developers building houses in the exurbs on prime farmland that no one wants because of the transort expense--allowing greed, and its rewards, to guide public policy...NO!!!!
Just because we are operating with a dangerous false legitimacy of a free market mechanism does not mean it doesn't work, it's not being allowed to work.
Allowing free market mechanics for burgers and fries is OBVIUOSLY not "proof" of it generally. It's the fallacy of composition that leads to other forms of command and control that will be nothing but, frankly, trying to obtain freedom by destroying it.
Accountability needs to be more efficient and direct. A free market will do that. It just needs to be allowed!
Very best wishes.
I wish it was more common here (Texas) to live in condos than the houses everyone wants. It would definitely make life easier.
We should not allow real estate developers run our communities where they dominate local, legal jurisdictions. They actually think local government belongs to them and get vengeful when challenged. This kind of elitism, being allowed to happen, is what's wrong with all this. These greedy, self-satisfied cohort need the rigors of a free, pluralistic, competitive marketplace to check, limit, their access to power.
More needs to be done to deconsolidate markets for a more direct and efficient accountability with little else left for government to do that we can't do ourselves through pluralistic mechanisms.
Very best wishes.
No. Electrical generation is 49% Coal, 20% natural gas, 19% nuclear, 7% Hydroelectric, 2.4% other renewables and 1.6 % petroleum.
That's right. More of your air conditioning comes from windmills than burning petroleum.
Urban sprawl may be undesirable for other reasons, but alternative energies actually permit even greater decentralization because homes can be entirely off the grid, allowing homes to be built far away from electrical transmission lines.
America can generate as much energy as it needs as a full replacement for gasoline. It is inadvisable to couple other agendas with energy independence. I agree urban sprawl is an undesirable social ill, but I'll be damned if I am going to risk sending soldiers overseas because we coupled a boatload of social agendas to energy independence and failed to get it passed.
Just when I think there is nothing in here that is worth reading...
Just back biting and meanness, I find those few posts that are inspired and insightful.
peace to you,
marsha
I have a fuel efficient vehicle; but I make so little money that the $50 tank of gas I now get (12 gal approx) will need to be refilled in about 5 weeks. (City driving kills me.) In other words, even with my little bit of driving I am spending about 6% of my income on fuel.
Don't ask me about food prices!
Unless the Chinese, Arabs or Russians do something extremely magnanimous either by cutting demand or increasing supply, we are looking at much higher than $5/gallon by 2010.
My view is the price of oil will only begin to stabilize when Europe and the US has most of its vehicles running on non petroleum sources of energy.
We can do this by moving to electrical vehicles and wind/solar/wave generation immediately. I have advocated this in many posts (Link ) and more wonkishly in Link .
Personally, I think that solar is the most promising since thin film panels can be produced at $1/watt by 2010. At least that's what some companies like First Solar claim they can do.
The choice is simple: Senator Obama wants the American people to pay the gas tax this summer but Senator Clinton thinks Big Oil should.
The Clinton gas tax holiday is financed exclusively through a tax on windfall profits from oil companies and keeps the Highway Transportation Trust fund intact. Hillary opposed a plan in 2000 for a gas tax holiday because it was financed with transportation funds.
Sen. Obama voted three times for a gas tax holiday in 2000 when gas prices were less than $2 a gallon.
The tax holiday is a gimmick that doesn't get consumers through a summer because it only delivers them a half tank of gas.
It has everything to do with getting Clinton and McCain through an election.
Why should we trust the politicians that play these games with us. The gas tax holiday solves nothing, squandering the windfall oil company taxes not on real solutions, but a means to buy an election.
Besides, it would cost 300,000 jobs and undermine our transportation infrastructure which is already badly under-funded.
One of the things that hit the world stage in the 60s, was the facts of world growth; along with the coming(now here) energy crisis. The U.S. was otherwise occupied in another part of Asia at the time. We paid little attention to these revelations until the early seventies, when OPEC
found itself as an organization and began flexing its new found power around world.The govornment had done little to prepare us for this time. (I.E.) NO fuel standards, no real reserve, no oversight at all of the little regulated energy industry, who had seemingly been setting us up for a suply and demand crisis for a long while.
So while our South American neighbors were busy preparing, by changing over to 80% ethanol using
autos, with higher mpg ratings; we were still building gas guzzlers, and dealing with even and odd rationing at a time when our refinerys were full and in fact tankers sat off shore, because the facilities were full to capacity. So now lets deal with the FACTS at hand; Hillary's proposal, is just that. It does NOT take highway funding away, it places it on the energy industry in the form of a wind fall tax on high profits. Also the one thing that you do have right is, it will take legislative action, the candidates can not do it.
Remember this also, many of these industry Gurus who challenge the effect or lack of, are still on energy payrolls, or are actually lobbyist for them. No one knows for sure what will happen with the tax lifting, along with relaxing the U.S. reserve policy. What is known is the situation, that many Americans are beginning to find untenable. Remember Bush has spoke of new energy programs, in EVERY state of the union speech, with a net result of NADA. To now have candidates and pundits repeating these empty future promises should make us ALL sick.
We should not give a damn about politically correct, or even partys, we need to have a govornment LEADER who will get back to WASHINGTON and introduce some legislation to make REAL strides for help NOW. Whether that means, rationing, taxing, regulating, or the temporary lifting of taxes. We elect the legislature to make RIGHT choices, not easy ones. ALL of these candidates claim to be leaders. It IS TIME to shut up and put up. It is also time for critics to make a stand; and not just muse on the net. IF YOU HAVE A POSITION, make it known to the legislature, and your candidate. If there is no action no real response from them, we do have a REAL problem. DO not just muse; ACT, it only requires a moment and an E-mail.
It is right that there needs to be changes made in the industry, oversight , research, pricing, and all of the rest. The new president can make the future logistics of all this a great priority, along with the legislature of the day. That said: there MUST BE ACTIONS NOW!!!
Obama has it right again.
Karl
For over 35 years we have known that we must become independent of foreign energy, yet through the Clinton and Bush administrations we have become much more dependent.
There is no reason to assume that Clinton II administration will be any different. The tax holiday and the nuclear umbrella for oil producing nations is a sad confirmation that Clinton believes in continued avoidance of the fundamental reason we are in this predicament.
Movement to electric vehicles powered by energy generated from alternative sources is viable technology today.
Consumers will pay less than they do for gas, we can drive the same types of vehicles we drive now (SUVs etc), and we will have an inexhaustible supply. This changes the rules of the energy game. Prices will go down over time, not up. We won't have to ask our soldiers to die because of our addiction to oil.
In what way does this favor the oil companies?
It would hurt the oil companies but not definitely bankrupt them as electricity is often provided by burning oil. Oil would still be used for home heating, making plastics and fertilizers and in existing transportation vehicles from ships to planes to older trucks, autos, etc. for many years.
The current level of price-gouging is not sustainable by the oil companies in the long-run because it is too extreme.