Letter: Don't punish oil companies
With rising gas prices and widely reported record profits in the oil industry, there's plenty of anger at major oil companies right now, especially in Congress. But does acting on that anger make for smart, responsible energy policy? Will it lead to the kind of legislation likely to bring down high pump prices? The answer is a clear no, and in fact there's a strong track record showing that Washington's "let's punish big oil" instinct ends up hurting consumers instead.
Judging by the rough, and somewhat childish, treatment given to oil industry executives by Rep. Ed Markey (D-Mass.) before the House Select Committee on Energy Independence and Global Warming on April 1, we can expect new rounds of penalizing measures like big business tax increases and price gouging legislation to be considered.
The problem is that these measures actually discourage domestic supplies and consequently raise prices. One only needs to look at the lesson of the windfall profits tax imposed by the Carter administration in 1980. According to the Congressional Research Service, the windfall profits tax "reduced domestic oil production from between 3 and 6 percent and increased oil imports from between 8 and 16 percent." So much for losing our dependence on foreign oil.
Ironically, Markey's committee, when it isn't reprimanding oil company executives in front of the television cameras, is busy trying to be part of the problem. It has expressed strong support for a number of measures to address climate change. These so-called cap and trade measures will, by design, drive up the price of gas so that the American people are forced to use less.
These government-imposed regulations would add to a host of already unreasonable legislation, like the restrictions on onshore and offshore oil production, and the unrealistically strict environmental regulations that keep big oil from drilling in certain locations and building better refineries, that are part of the reason for high oil and gasoline costs. If anything, Congress should be angry at itself, not big oil.