Posted on April 30, 2006

by

Daniel Clark

The Democrats are sounding terribly concerned about the high prices we're paying for gasoline these days. Upon closer inspection, however, we can see that they have no problem with gas prices being higher than three dollars a gallon. In fact, they prefer it that way. Their only real objection is about where the bulk of that money is going.

Sen. Charles Schumer (D, N.Y.) says that the recent jump in gasoline prices goes "way beyond what supply and demand would merit." Somebody should ask him exactly what supply and demand dictate the price to be, considering that global demand for oil is booming, while Schumer and his party have been doing everything they can to retard the growth of the supply.

While the Democrats have been busy thinking of excuses to raise taxes on "Big Oil," the Republicans have repeatedly proposed measures to open ANWR for exploration, allow new offshore drilling, increase refining capacity, and streamline gasoline distribution by reducing the number of EPA-required formulations. The Democrats have consistently, and often unanimously, opposed them, so that they've only needed the help of a few stray RINOs in order to kill each of these initiatives.

Sen. Schumer has never bothered to take out his supply and demand calculator, and warn us how much all that obstructionism would cost at the pump. Not that it was ever a pressing concern for Democrats, who commonly observe that high gas prices are European, and therefore desirable.

In Al Gore's 1992 book, Earth in the Balance, the future vice president proposed a "CO2 tax," as a means of encouraging conservation, by deliberately creating a hardship for consumers. In President Clinton's '93 budget, Gore's proposal became the BTU tax, which would have penalized all uses of energy derived from petroleum, natural gas or nuclear power. Without a single Republican vote, the Democrats passed the BTU tax through the House. Thanks to intense arm-twisting by the energy lobby, the measure languished in the Senate, forcing Clinton to abandon it in favor of a comparatively modest 4.3 cent per gallon increase in the gasoline tax.

Clinton and Gore were hardly alone in their zeal to punish gasoline consumers. Senator Paul Tsongas, who was Clinton's most formidable opponent in the '92 Democratic primary, himself proposed a whopping 50 cent per gallon increase in the federal gas tax. The Democrats' most recent presidential candidate, Sen. John Kerry, supported the idea.

So it's not really the amount that Americans are paying for gasoline that's riling the Democrats; it's just that they think the wrong people are collecting the payments. When oil companies make record profits, it's called "price gouging." When the government raises gas taxes to record-high levels, it's called "saving the planet."

When gas prices spiked last fall, Sen. Byron Dorgan (D, N.D.) proposed to punish the oil companies with a "windfall profits tax," of 50 percent on all oil priced above the rate of $40 per barrel. If his bill had passed, it would have meant that any U.S.-based company that charged the rate of $75 would be taxed $17.50 per barrel. Foreign oil companies, of course, would not be subject to the tax, and would therefore find themselves at a significant competitive advantage.

This is exactly what a nonpartisan study found to be the result of a similar tax that was enacted between 1980-88. According to the Congressional Research Service, an agency within the Library of Congress, the windfall profits tax of the 80s had the effect of reducing domestic oil production by somewhere between 3 and 6 percent, while increasing oil imports by 8 to 16 percent.

Although this objection was raised against Dorgan's suggestion at the time, that hasn't stopped several prominent Democrats -- joined by Sen. Arlen Specter (R, Pa.), as usual -- from reviving the idea less than a year later. Senate Minority Leader Harry Reid (D, Nev.) is among those pushing for a new windfall profits tax, along with Sen. Carl Levin (D, Mich.) and Pennsylvania Governor Ed Rendell, who formerly chaired the Democratic National Committee.

Is it possible that these experienced politicians really expect the same policy to produce a different outcome this time? Or are they cynically trying to create an even greater dependence on foreign oil, along with a further suppression of the overall supply, in exchange for a government seizure of domestic oil profits? One way to answer that question is to try to think of any occasion on which Democrats have been sympathetic to the interests of the consumers.

After all, this is the party that wants to drive Wal-Mart out of existence. This is the party that opposes tort reform, so that prices are inflated by outrageous "pain and suffering" awards to slip-and-fall scam artists. This is the party that intentionally inflicts economic harm on consumers of cigarettes and alcohol, by repeatedly raising taxes in an attempt to alter their behavior. (Sound familiar?) For Democrats to knowingly sabotage the domestic gas supply when prices are already high would only be consistent.

At a 1994 town hall meeting on health care reform, Herman Cain, then-CEO of Godfather's Pizza, tried to explain to President Clinton how costly the Hillary Plan would be for his company. Without hesitation, Clinton responded, "Just raise the price of your pizza." To a Democrat, business is just that simple. Think you're overtaxed? Raise your prices. Is compliance with federal regulations too costly? Raise your prices. If the customers complain, Congress can always subpoena Herman Cain, and demand that he justify his compensation package.

Even now, as they're feigning pity for consumers, the Democrats are planning to raise income tax rates, by voting against the extension of the Bush tax cuts. That's because they think that taxpayers, like oil companies, don't "need" quite so much of their own earnings. That's something that ought to make rank-and-file Democrats sit up and take notice. Their own party is looking at them the same way they look at those hated "Big Oil profiteers."

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