Via Power Line comes some common sense from Republican Congressman Mike Conaway of Texas:
Congress’s actions must be rationally based on economics and the realities of global energy markets. We must not fall into the political trap of knee-jerk reactions that will only worsen our problems.
There is a great hypocrisy in America’s national energy policy. As long as politicians continue to demagogue energy companies and oppose legislation that addresses the long-term problem of rising energy costs, we will continue to fail the American people.
Yes, oil companies are making large sums of money in real dollars; however it is disingenuous to simply look at the raw dollar amounts without looking at these numbers in the proper economic context. We need to look at the percent of return these companies are making. In reality the oil and gas industry’s earnings are easily comparable to other industries and in many cases lower.
According to Business Week and Oil Daily magazines, the oil and natural gas industry earned 5.7 cents for every dollar of sales compared to an average of 5.5 cents for all U.S. industry over the past five years. By contrast in the third quarter of 2005 the pharmaceuticals industry made a profit of 18.6% per dollar of sales versus 7.6% for the oil and gas industry. The average profit per dollar for all US industries is 7.9%. ***
It is time for Congress to look at the facts. It is the global market place and the law of supply and demand, not greedy oil companies that are responsible for higher prices. The price of a barrel of oil is set by the global market not by multinational energy companies. When some in Congress refuse to allow for domestic and deep sea energy exploration that would increase supply and reduce cost, the problems get worse. We must enact legislation that would open ANWR, expand refinery capacity, reduce costly fuel regulation and allow for deep sea exploration. These are long-term issues that could have made a difference today had we avoided political posturing and addressed them years ago. It isn’t too late for us to do the right thing now and begin enacting common sense legislation like increasing supply and increasing research and development regarding alternative sources of energy.
We must stop allowing the issue of rising energy costs to be clouded with misinformation and politically motivated emotion.
Rep. Conaway is exactly right. Congress is pandering, pure and simple, and punishing oil companies for fictional accusations of “price gouging” will only hurt the US energy market. The whole notion is ridiculous – no sane set of oil companies will collude to artificially raise prices when there’s so much economic advantage inherent in being the lowest-cost supplier in the block. Congress’ economic illiteracy will only make matters much, much worse.
Want to lower the cost of energy for the average Americans? Repeal fuel formulation rules, open ANWR to oil exploration, and cut fuel taxes across the board. Want to create shortages and more frustrations? Attack oil companies, keep restricting the development of new domestic oil sources, and increase environmental regulation.
It’s hardly surprising in which direction Congress appears to lean…