NCPA - National Center for Policy Analysis


May 18, 2007

Democrats, seething at the injustice of gasoline prices, have sprung to the aid of embattled motorists.  Speaker Nancy Pelosi has vowed to achieve "energy independence" to help reduce the price at the pump.   But such vows are -- as Soviet grain production quotas used to be -- irrational reflexes that no serious person takes seriously, says syndicated columnist George Will.

In fact, as Steven Hayward of the American Enterprise Institute notes, oil is more secure now than it was in the 1970s.  Consider:

  • Since 1975, energy consumption per unit of gross domestic product has fallen 48 percent.
  • Furthermore, oil represents a shrinking share of total U.S. energy consumption -- from 44 percent in 1970 to 40 percent in 2005.
  • The oil America consumes -- only one-eighth of which comes from the Middle East -- is used almost entirely in transportation, and accounts for about 40 percent of energy uses.
  • Half of America's electricity is generated by coal, of which America has a huge abundance.
  • America has about 22 billion barrels of proven oil reserves, and an estimated 112 billion barrels that could be recovered with existing drilling and production technology.

Nevertheless, one of Pelosi's moves has been to endorse H.R. 1252, which ostensibly protects consumers from "price gouging."  Oddly enough, the bill does not explain how a gouger can gouge when his product is obtainable cheaper nearby, says Will.  In reality, Pelosi's constituents are being gouged by people like Pelosi -- by government:

  • While oil companies make about 13 cents on a gallon of gasoline, the federal government makes 18.4 cents (the federal tax).
  • California's various governments make 40.2 cents (the nation's third-highest gasoline tax).
  • Pelosi's San Francisco collects a local sales tax of 8.5 percent -- higher than the state's average for local sales taxes.

Source: George Will, "Energy Independence,", May 17, 2007.


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