The Republican befuddlement over energy policies to address the current spike in gasoline prices and the need to devise a rational nationwide energy policy were never more evident than in Congressman Dean Heller’s (R-NV2) in a conference call with reporters. [EDFP]
Attempts to solve the overall problem included in the recently passed Energy and Job Creation Act met with Heller’s disdain: “It goes to show who controls this place now. The environmentalists that Congress has sold out to ... trial lawyers and big labor,” Heller said. “That is why you are seeing tax credits for trial lawyers in energy bills.” [EDFP] One should give Heller credit for cramming all three of the Grand Oil Party’s traditional boogey-men into the same sentence; however, the Representative provides no substantiation for their involvement in the current price spikes at the pump.
The 2nd District Representative calls for an investigation into whether there has been market manipulation with oil futures and brags that he is asking for a hearing on this topic. How this hearing would add more information to the discussion than that already gleaned from the Senate Commerce Committee’s session on the subject early this month isn’t clear; or, for that matter, from the House Committee on Energy and Commerce’s investigation into the self-same subject. [CNN] Nor is it clear how Representative Heller missed the fact that there is already a bill (H.R. 6238) sponsored by House Energy and Commerce Committee chairman Rep. John Dingell on the subject, co-sponsored by the ranking member of the Energy and Commerce Committee Rep. Joe Barton (R-TX). [ECcom]
Heller also boasts of writing to House leadership asking about an energy plan calling for more drilling and the construction or expansion of more refineries to depress prices in the long run; and, then inexplicably adds “I’m concerned if we don’t do something quickly we will see $5 or $6 gasoline.”
Congressman Heller has probably long since sold his Economics 101 text, but might be well advised to review the basics, like “equilibrium pricing,” and “economic incentives.” If the Congressman adheres to the basic free market tenet that an economic entity will act in ways to best secure its profitability, then the present lack of drilling development and refinery capacity should make perfect sense. When prices are high there is no economic incentive to increase supply.
The solutions Congressman Heller is setting forth actually aren’t in the best economic interests of the oil corporations he seeks to support. As noted in a previous post the oil giants could have increased their refinery and drilling operations at any time, but chose not to do so, thus increasing the price of their products and thereby the profitability of their companies.
This is partially evident when it is considered that the Bush Administration’s leasing of oil and gas fields has out-stripped the industry’s ability or interest in terms of drilling. Oil and gas industry corporations have leases on about 44 million acres of public land in the Rocky Mountain region, but have developed only about 10 million to date. Prices for gasoline have not dropped in spite of the fact that according to the Baker Hughes Rig Count the
There also appears to be some confusion about what might be done and what can be done. Some of the oil shale operations mentioned by the President haven’t begun because the technology isn’t in place: “Government regulations do not prohibit development of this potential resource, technological feasibility does. Current federal policy supports a robust oil shale research and development program on federal lands managed by the BLM. However, despite a significant investment, industry admits they are a decade or more away from establishing the economic viability, technical efficiency, and environmental performance of the technologies. Even Shell admits its new technology remains many years away from viability.” [WS Press Release
The hard fact is that the