Everyone complains about high gas prices, yet viable solutions to today’s energy crisis get tabled by the very people who do the complaining. Certain Californians come to mind — folks who philosophically luxuriate in a moratorium on offshore drilling only to boil over on Wilshire Boulevard when faced with gas at $5.50 a gallon.
Then there’s Congress.
Some proposed solutions to the gas-price crisis, such as a windfall profits tax on oil companies, would merely take us back to the good old days of the gas line. Incentives matter. So do disincentives. When you penalize companies for bringing gas to market, less gas (at higher prices) will come to market.
But Congress has been getting energy wrong for quite a few years now. When President Bush launched a viable energy plan in 2001, Democrats submarined it. They said a strategy for increased drilling would take too long to have an effect — maybe eight to ten years. So why bother?
And here we are again. In the midst of the 2008 energy crisis, Democrats say any new drilling allowances in the present will take at least eight to ten years to bear fruit. It’s a line of reasoning that will never produce a solution, even though solutions were what the Democrats promised.
Recall that the current crop of congressional Democrats ran in 2006 on a platform of lower gasoline prices. It was a hollow promise; congressional inaction has predictably led to higher prices, and several more negatives. America today is growing poorer as wealth shifts to the oil-rich Middle East as well as to oil-endowed Russia. At the same time, Democratic solutions to the energy dilemma emphasize the same failed strategies once advocated by Jimmy Carter: Stay home, don’t drive, and put on a sweater if you’re cold. In other words, watch your standard of living plummet.
The Democrats want to raise taxes on oil companies, prohibit drilling offshore and in Alaska, and generally eliminate many sources of alternative fuel production. On the one hand they force us to use corn-based ethanol, which serves to push energy and food prices higher while arguably contributing to world food shortages. On the other hand they limit the importation of sugar-based ethanol from Brazil, a source of energy that does not deplete our food stock.
John McCain offered a breath of fresh air when he proposed a $300 million prize for the invention of an advanced battery-powered car. Of all the government energy solutions being proffered, this is the one that offers incentives to get the job done. Americans in the 1960s were challenged by President John Kennedy in much the same way. The result was that the U.S. got men on the moon before the Soviets.
There is a clear delineation between the parties on how to solve our energy crisis and manage our economy in general. The Democrats prefer the lower-your-standard-of-living approach, the centerpiece of which is punishing free markets. The Republicans — at least those in the Reagan wing of the party — want to offer free markets greater incentives to find the solutions to our energy problems, an approach that has proven to lead to problems solved and higher standards of living.
The big question is whether or not voters will recognize this divide in such clear terms. According to the polls, they just might. Congressional approval ratings, as per PollingReport.com, were in the low 30s when the Democrats took over in early 2007. Those ratings recently plunged to 13 percent. For the sake of comparison, President Bush’s ratings were in the mid-thirties in 2007 and now are in the high twenties, almost double the congressional tally.
The mainstream media, of course, tell a much different story. Actually, they tell half a story. They inform us repeatedly about the president’s historically low approval ratings and rarely if ever mention the lower congressional numbers. But the media’s agenda has a way of falling short.
A brief story, if I may: Old timers will remember that the U.S. invaded the Dominican Republic in 1965 based on fears that Castro would extend his communist reach to that nation. I was in the D.R. at the time as an army interrogation officer attached to the 82nd Airborne. Early on my mission was to ascertain whether detainees were rebels or loyalists, which had me asking among other things, “Who do you want to be the president of your country?” There were two choices: Juan Bosch on the Left, and Joaquin Balaguer on the Right. The mainstream press on the mainland had Bosch pegged as the shoe-in, and they never even mentioned Balaguer’s name. The detainees, however, almost unanimously agreed on Balaguer. The winner the following year? Joaquin Balaguer.
The moral is that the people sometimes get what they want, regardless of what the media say. If voters can connect gas prices at the pump with inaction by Congress, and energy solutions with free-market incentives, the media won’t know what hit them this November.
– Thomas E. Nugent is executive vice president and chief investment officer of PlanMember Advisors, Inc., and principal of Victoria Capital Management, Inc.