May 07, 2006

Republicans and Big Oil

From Carl Pope of the Sierra Club:

Republicans were boxed in by their continued insistence that the only solution to the oil problem is to increase domestic supply. Experts know it won't work, for the simple reason that the growth in world demand for oil is going to outpace any plausible increase in American output, but that hasn't stopped the push for new drilling. The collapse of Frist's proposal was made all the more spectacular when the leadership withdrew its proposal to eliminate tax loopholes benefiting Big Oil. That meant that the only financing source left on the table was drilling revenues from the Arctic Refuge. Suddenly, the ploy was transparent: It was another gambit to open the refuge to drilling. Sixteen years ago, after a long campaign led by the Sierra Club, Congress came within four votes of adopting legislation that would have required automakers to produce vehicles with an average fuel efficiency of 40 miles per gallon. If we had won that vote, the world would be different today: America would be using about half as much oil as it currently does; world demand for oil, and hence oil prices, would be dramatically lower; and we would have paid perhaps a trillion dollars less to foreign oil producers.
The American auto industry would be leading, not lagging, in making vehicles with new technologies that consumers want, and GM and Ford debt securities would not presently be rated as junk bonds. The US would have embraced Kyoto, because it would have been easy to reach our emissions targets. And, finally, there would have been considerably less impetus to pursue risky military adventures in the Persian Gulf.

Today, we face another opportune moment. Yet, if you count votes in Congress, we've gone backwards politically. It's true that the coalition for efficient vehicles is still bi-partisan, with John McCain joining Joe Lieberman in the last major effort to pass legislation. But overall, the conservative take-over of the Republican party has effectively made Big Oil the party's paymaster, whatever the conservatives intended. There are far fewer independent and conservative voices for energy sanity now than there were in 1990. The Democrats, meanwhile, remain divided. Auto state Senators fear that it's already too late for Detroit to catch up with Japan, yet they continue to hope that somehow things will be different next year.

That's the story behind the current flailing in Congress over high gasoline prices, global warming and war in Iraq -- flailing which led Senate Majority Leader, Bill Frist, to embrace the insulting idea of a $100 tax rebate, because, as the New York Times tells it, Democrats were proposing to suspend the federal gas tax. Republicans, correctly, thought that was a stupid idea because "there was no guarantee that the oil companies would pass the savings along to consumers." (Indeed, I think I can guarantee that the oil companies wouldn't pass a penny of the savings along -- that's not how oil companies work.)

Republicans were boxed in by their continued insistence that the only solution to the oil problem is to increase domestic supply. Experts know it won't work, for the simple reason that the growth in world demand for oil is going to outpace any plausible increase in American output, but that hasn't stopped the push for new drilling. The collapse of Frist's proposal was made all the more spectacular when the leadership withdrew its proposal to eliminate tax loopholes benefiting Big Oil. That meant that the only financing source left on the table was drilling revenues from the Arctic Refuge. Suddenly, the ploy was transparent: It was another gambit to open the refuge to drilling.

The drilling drum-beat continues in the House as well. While Alaska's Don Young continues to his quixotic drive to drill at all costs, his Sancho Panza, Richard Pombo, has come up with a -- well, let's just say very creative -- method of taxing Big Oil. According to Pombo, if we let the oil industry drill the Refuge, that's actually a way of taxing them -- because of course the industry will pay some royalties and taxes as part of the deal:

Many Democrats have called for new taxes on 'Big Oil' as record-high prices have led to massive profit margins, ... And for once I agree with them - Congress should open ANWR, put 'Big Oil' to work increasing American supplies to lower prices, and generate massive new tax revenues at the same time. How could tax-hungry Democrats say no to that?

At the same time, the Administration is caught in the web of its own lies about why the President says he needs new legislative authority to improve fuel-efficiency standards. Even the American Enterprise Institute comments that, "Republicans are capitulating to pressures to do something, even if they would be doing things that make no sense...". While the White House says it wants to make the standards tougher, it obviously doesn't mean it, since it also says it wants to "eliminate perverse incentives to produce smaller" cars, trucks and SUVs.

But Congress will get a chance to vote, it appears. Triggered by Bush's Biloxi, Mississippi speech calling for Congress to grant him authority to change CAFE standards, Joe Barton and Trent Lott are holding hearings and preparing bills. In the House, environmental advocates Ed Markey and Sherry Boehlert have just told us that they will offer an amendment to raise CAFE to a 33 mpg combined (car and light truck) standard over about 10 years. Committee action could come next week, floor action in the House a week later. 33 mpg would save about 2.5 million barrels/day when phased in. This is about what we now import from the Persian Gulf -- not a bad down payment.

Meanwhile, Senator Trent Lott, whose last public comment on fuel efficiency was that tougher standards would have us all driving "glorified golf carts" has scheduled a CAFE hearing for next week in Senate Commerce with a bill to follow. Senate Democrats, led by Maria Cantwell, are preparing their own bill.

The votes are not there to win this year. But the climate is there to make this a very big issue in November -- and both parties sense it.



"For most of history, Anonymous was a woman." ~ Virginia Woolf

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