Consider a talk on energy policy given the other day by Rep. Jack Kingston (R., Ga.). The congressman was invited by the Media Research Center to provide his thoughts on the media’s coverage of the recent gasoline-price spiral. Rather than do that, however, Kingston used his time to pitch his bill–HR 4409–and to ruminate on how we got into this mess.
Now, Jack Kingston is thought of as a pretty conservative guy as far as these things go. He was a member of the Republican class of 1994 and is currently vice chairman of the House Republican Conference. The MRC–a long-standing member of the Washington conservative establishment–was sure that they were getting one of the most free market guys on the Hill to talk some sense to the press.
Here’s what they got: a pitch to have the feds establish a goal of reducing oil consumption by 20 percent by 2025. To get there, Kingston proposes to compel auto manufacturers to make flexibly fueled vehicles, to further expand the subsidies provided to those who buy hybrid-powered cars, and to unleash another avalanche of subsidies on exotic energy technologies far and wide. If we adopt this bill, Kingston believes that America will be energy independent by 2015.
Let’s dwell on this for a moment. Government pronouncements that the economy produce x amount of this or consume y amount of that are the characteristics for which Soviet five-year plans were famous. Unfortunately, such dictates are all the rage in Washington today. One might expect free-market Republicans to be leery of such ham-handed intervention. But one would be wrong.
The “make a wish” aspect of the congressman’s bill is also truly amazing. America consumes about 20 million barrels of petroleum products every day (mbd). We produce about 5 mbd of crude and we import about 10 mbd a day of crude. Through the miracle of modern technology, our refineries produce about 17 mbd of products (refineries actually produce more output volume than they use as input), and we import another 3.5 mbd.
Now, if you believe that mandating flex-fuel automotive capability and providing fatter subsidies for hybrids will allow us to eliminate 13.5 mbd of crude and refined imports in nine years as well as allow for economic growth, then you’re probably the kind of person who is busily working with Nigerians on get-rich-quick schemes over the Internet.
Even more interesting was Kingston’s rationale for the bill. His first point was that we are being forced to turn to hostile countries to get the oil we need. And what countries might those be? “Syria, Iran, and Venezuela” he said.
Earth to Kingston: In 2005, the United States imported no crude oil from Syria. In 2004 501,000 barrels of crude oil came into the United States. from Syria–.014 percent of total crude-oil imports. The congressman was apparently unaware that the United States bans all trade with Iran and that oil imports from that country are exactly 0. Kingston was correct, however, that we import from Venezuela–about 1.23 mbd in 2005 or about 12.3 percent of crude imports.
One might cut the congressman some slack and grant that it doesn’t matter where we get our oil. A cutback in Iranian production, for instance, would raise the price of crude oil everywhere in the world to the same degree. To consume oil is to therefore rely on oil producers whether we buy directly from those producers or not.
But if that’s what Kingston is worried about, then fretting about how much oil we import for any source is pointless. The price “bad” countries receive for selling their oil is determined by aggregate world demand, not whether the U.S. uses their oil.
Kingston’s second rationale for the bill was the now-predictable observation that prices are high and government must act. Toward that end, he recalled a constituent who recently complained that he was driving 75 miles each way to work in a Ford F-150 and that gasoline prices were absolutely killing him. The government, Kingston intoned, simply had to do something.
A good rule of thumb is that the feds shouldn’t do something for you that you can easily do for yourself. What Kingston should have told his constituent is this: “If you don’t like high gasoline prices, then you might want to think about selling the F-150 and/or moving closer to work. That would do more to cut your costs than anything I can do.” Likewise, if constituents don’t want their gasoline money going to Hugo Chavez, then they shouldn’t fill up at Citgo (the corporate vessel through which Venezuelan oil is sold in the United States).
Nor has it apparently occurred to Kingston that the only way to reduce oil consumption is to make oil more expensive, and expensive oil equals expensive gasoline. So just how will the congressman’s bill (which, remember, calls for a 20 percent decline in oil consumption by 2025) help our whining friend in the F-150?
The third and final argument offered for the bill was that “unlike 1973, the market is not responding to high prices.” But saying “the market is not responding so Congress must” is the same as saying “consumers and firms are not doing what we want them to do, so Congress must force them to behave as we wish.”
Now, what kind of Republican makes an argument like that? Is it really Kingston’s position that if Mr. Ford F-150 refuses to surrender the pickup, it’s government’s job to wrench it out of his hands somehow or to beat him over the head with some collection of government sticks?
Unfortunately, Kingston is no anomaly. Speaker of the House Denny Hastert (R., Ill.) regularly fumes that oil and gas companies aren’t investing in the sort of things in which Congress wants them to invest. The feds, he says, might have to step in and force those companies to spend according to congressional preferences. Congressman Joe Barton (R., Tex.), chairman of the House Energy and Commerce Committee, echoes Hastert’s complaints and told the press a few days ago that he is willing to put everything on the table when Congress moves an energy bill next month. Apparently, it’s too much to ask Republicans to rule out windfall profit taxes or price controls or any of the other nutty ideas that are gaining currency these days.
Over in the Senate, the GOP has been reduced to a state of gibbering madness. Republicans have supported windfall taxes, price controls (restrictions on price gouging), and are flirting with the idea of breaking-up oil companies. Majority Leader Bill Frist’s big idea was a ridiculous one-time $100 rebate check to taxpayers. Even rock-ribbed conservatives such as John Sununu (R., N.H.) have signed on to much of this lunacy, to say nothing of President Bush’s new-found love affair with switch grass and assorted energy exotica.
If there is a single Republican politician anywhere in Washington saying that market forces will take care of high gasoline prices faster and less painfully than anything politicians can offer, he/she has escaped our attention.
The abandonment of common sense is as striking as the abandonment of principle. Republicans bray that the feds must take the lead in order to break our “addiction” to oil, but then throw a tantrum over the lack of investment in gasoline refineries. This is akin to bitching about the drug trade while simultaneously working to promote the construction of meth labs.
Republican politicians complain about high gasoline prices but have redoubled their efforts to force ethanol into automotive fuel tanks. The fact that ethanol is more than 50-percent more expensive than gasoline in wholesale markets gets no notice.
They evangelize for nuclear power to secure energy independence despite the fact that–unless we’re going to shove mini-nuclear reactors under the hoods of our cars–nuclear power has nothing to do with oil imports. Build 100 new nuclear-power plants, and you might displace natural gas and coal, but you won’t displace much oil because only a trivial amount of petroleum is dedicated to electricity generation in America today.
They have conniptions about how much public land is off-limits to the oil industry and suggest that more production would reduce prices. Here there is at least some truth. Small-percentage changes in supply can have large effects on price in the short run. But over longer periods of time, increasing global crude oil production by 1-3 percent (the sort of thing we might possibly expect if we turned the industry lose on public lands) would only reduce prices by the same amount.
For the most part, Republicans are a disgrace. They either don’t know or don’t care to know what they are talking about. The “moderates” sound like Ralph Nader; the conservatives, like Jimmy Carter. It’s as if Ronald Reagan never existed.
–Jerry Taylor and Peter Van Doren are senior fellows at the Cato Institute in Washington, D.C. Van Doren is also editor of Cato’s Regulation magazine.