Rep. Lamar S. Smith(R-Tex.), ranking minority member of the House Judiciary Committee, in an opening statement to a May 22 hearing by the committee's task force on competition policy and antitrust laws on retail gasoline prices and oil industry competition:
"Congress should be working to expand the domestic supply of energy. Yet time and again, the House Democratic leaders have rejected opportunities to increase that supply, which would result in a drop in prices at the pump.
"For example, last August 95% of House Democrats voted against a proposal that would have opened up the Outer Continental Shelf and the Arctic National Wildlife Refuge to drilling for oil and gas. Only one-tenth of 1% of ANWR would be impacted. It's frozen tundra – not exactly where the caribou roam.
"There may be as many as 86 billion bbl of oil in the OCS and ANWR, enough oil to keep America running for five years with no foreign imports at all. Drilling in ANWR alone could increase US crude oil production by 20% over today's levels, which would mean lower [gasoline] prices in the future.
"While no one contends that opening up the OCS and ANWR to drilling will make the United States energy independent overnight, it is a step in the right direction.
"Many believe that alternative fuels are the solution to [high] gas prices. While alternative sources are important, including solar and wind, they account for only 6% of US energy consumption. Even if we doubled our reliance on these types of energy, it would hardly be noticed at the gas pump.
"With fossil fuels constituting so much of our energy consumption, both now and in the future, expanding our access to oil and natural gas must be part of the solution in reducing gasoline prices.
"An 'excess profits tax' on the oil companies has been proposed. While it is true that these companies have strong profits, profits are necessary for companies to expand, produce and create more jobs.
"To put these profits in perspective, last year oil and gas companies had a profit margin of 8.3%, lower than the 8.9% profit margin enjoyed by all manufacturing sectors, and significantly lower than the 19% profits enjoyed by the beverage and tobacco companies or the 18% profits in pharmaceuticals. Do we really want to start punishing any company that makes more than an 8% profit?
"An excess profits tax would only serve to discourage these companies from investing more in their exploration, production and refining capabilities. This is hardly the way to reduce the price of gasoline.
"Not only would an excess profits tax not produce an extra drop of oil, it would drive down the value of oil company stocks which are owned by millions of Americans in their pension funds, retirement funds and mutual funds. In fact, all federal employees who participate in the Thrift Savings Plan have a stake in energy companies.
"There's an old cartoon in which the character, Pogo, says: 'We have met the enemy, and he is us.' It is Congress who needs to be held accountable for not supporting policies that would increase the supply of oil and reduce the price of gas."
Contact Nick Snow at [email protected]
