In response to growing criticism from the electorate that politicians should do something, President Bush suspended clean air rules for gasoline this morning. Bush also stopped deliveries to the Strategic Petroleum Reserve and asked Congress to suspend tax breaks for oil companies in his speech to the Renewable Fuels Association.
The White House sent letters today to state attorneys general urging them to vigorously enforce state law "against any anticompetitive, anticonsumer conduct in the petroleum industry." Uh huh.
Other politicians responded with a news conference, trying to blame high gas prices on purely political reasons rather than consumer behavior, and proposing a suspension of the gasoline tax. The 2006 November election should be pretty exciting to watch.
The Big Oil tax breaks were for the purpose of encouraging oil exploration, but I think there's sufficient price pressure to encourage exploration right now. I spent the weekend riding Amtrak from Colorado to California -- I saw probably hundreds of wells being drilled along the Colorado Front Range and on the Western Slope around Rifle, CO. Most of these are for natural gas, but oil price increases are mirroring the explosive gas price gains that occurred last year. Eliminating the tax breaks is a good idea. The folks at The Oil Drum are smarter than me and have a lot to say about the issue today.
I don't know about the windfall profit tax proposals that are floating around. Doug makes the point that we're all to blame for the high prices and high profits by our participation in the system; if you drive a car or truck, you're paying the salaries. Furthermore, many of us own a retirement plan of some kind which are now heavily invested in the energy industry. Finally, the high profits are the reward for gambling in a very high risk industry. How many of you are willing to invest billions into an overseas project, only to have it nationalized by a populist politician?