Politics & Policy

Pelosi Premium Pain

Democrats want more expensive energy.

House Republicans sent out an e-mail to celebrate the second anniversary of Speaker Nancy Pelosi’s (D., Calif.) promise that she had a “common-sense plan” to reduce gasoline prices — details of which she has yet to reveal. Their release included the gory details on how today’s fossil-fuel prices compare to those of two years ago: a barrel of crude oil up to $117 from $64; heating oil at $3.31 per gallon, up from $2.71; gasoline up to $3.56 a gallon from $2.96 (remember when we used to complain about gas flirting with the $3 mark?); and diesel fuel up to $4.14 from $2.87 per gallon.

Republicans have taken to calling this phenomenon the “Pelosi Premium.”

Now that may be unfair: Party control of the Congress (or the White House, for that matter) has very little to do with short-term oil and gasoline prices. The big factors today, for instance, are a weak dollar and surging demand for petroleum in emerging markets like India and China.

Still, it hasn’t helped that Democrats have routinely blocked oil exploration on public lands. President Clinton’s 1995 veto of a bill allowing drilling in the Arctic National Wildlife Refuge in 1995 is probably now costing us about a million barrels of oil per day. In 2006, Pelosi’s Senate Democrats blocked an effort to drill the Outer Continental Shelf for what the Department of the Interior estimates to be 8.5 billion barrels of known oil reserves and 86 billion barrels undiscovered.

All that said, the real problem — and the reason Pelosi really does deserve blame — is that Democrats’ political goal of reducing carbon emissions continues to trump their populist rhetoric on gasoline prices. The two stances are impossible to reconcile. Try as they might to blame oil companies for the pain Americans feel at the pump, the Democrats want higher prices for gasoline — and for all forms of energy that emit carbon. Economic barriers against CO2 emissions are a requirement for environmental progress in the Democrats’ view, and this is the entire purpose of the carbon cap-and-trade system they will put before the House this summer — to create economic disincentives for emitting CO2.

Last summer, Senate Environment and Public Works Chairwoman Barbara Boxer (D., Calif.) said as much in a conference call with reporters and environmental groups. Her exact words were:

[E]veryone has told us, including business leaders, that to drive the investment in these technologies that are going to solve our global-warming challenge, we need to have clear limits on carbon pollution.

Democrats know that business leaders will be unwilling to invest in other technologies as long as hydrocarbon fuels remain the best economic option to power their industries. Even with oil prices at their current levels, investors view other approaches as money-losers. Therefore, we must raise the price of fossil fuels in order to make clean alternatives competitive.

According to the Department of Energy, transportation accounts for about one-third of U.S. carbon emissions. Therefore, higher gasoline and diesel prices are a vital part of any serious emissions-reduction program. It hardly matters whether the higher prices come through an excise tax (which benefits the Treasury), a carbon cap-and-trade system that hits oil producers (which benefits companies as General Electric), a dramatic increase in world demand for petroleum (which benefits oil companies), a weak dollar (which benefits exporters) or even conspiratorial price-gouging. Each of these five phenomena has the same effect: each raises an economic barrier against the emission of carbon dioxide. And each does so at your expense, because the costs are inevitably passed along.

High gas prices are bad for the economy, but the point here is not to make moral judgments about the trade-off between high gasoline prices and reduced carbon emissions. The point is that Democrats have taken a dishonest public stance with false promises of lower gasoline prices that they never intended to honor. Democrats are shedding crocodile tears for the end consumer of petroleum. If they say they hate to see you eaten alive by Big Oil, it is only because they would prefer to devour you themselves.

Without any government intervention, high oil and gasoline prices are already prompting Americans to conserve energy and providing greater incentive at the margin for investment in alternative sources of energy. A new government report from the Department of Energy this month shows that gasoline use is actually down 0.2 percent so far this year — the first such decrease since 1991, and good news if you worry about carbon emissions. Normally, gasoline consumption rises each year with the number of cars on the road, but high gas prices are clearly having a positive environmental effect. This summer, when prices rise still higher, so will the barriers to fossil-fuel pollution and incentives to conserve oil and to invest in new technologies.

If “greedy oil companies” are indeed to blame for the current high prices, Democrats should thank them for saving the planet instead of cynically (and absurdly) scolding them for “price-gouging” in an attempt to deceive voters. It makes little difference to your bottom line, to the economy, or to the environment whether you are shaken down by carbon taxes and regulations or by an oil producer. The end result is the same — less atmospheric carbon dioxide.

Curbing carbon requires economic pain. You can judge for yourself whether that will lead to environmental progress. In the meantime, we ought to drop the pretense that Democrats have or ever had plans to give Americans cheaper gasoline.

 – David Freddoso is an NRO staff reporter.


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