The Democrat-controlled House has given Republicans the chance to act once again as though they believe in the fundamentals of their party. It has passed two energy bills so breathtakingly at odds with US needs that the job of discrediting the nonsense should be easy. But are Republicans up to it?
The gasoline price increases that have agitated US energy politics into near hysteria send a simple message that federal officials must heed: The US needs a strong increase in its supply of affordable energy. The country is part of a world in which rising demand has encountered physical limits on systems-natural and mechanical-that deliver energy in useful forms. The strains have been aggravated by geopolitical tension, by long-standing political limits in the US on supply-enhancing activities such as drilling and refinery construction, and by natural disasters.
Popular demons
These are sufficient and evident reasons for prices of petroleum products to have risen these past few years. The popular demons that motivate energy politics have not driven up prices. As has been proven repeatedly, oil companies are not manipulating prices. The Organization of Petroleum Exporting Countries isn’t levitating crude prices, either. Notwithstanding OPEC’s controversial production restraint, the ability of the group’s key members to raise output of the light, sweet crude the market needs in fact remains limited.
Prices will ease, as they always do, when supply increases and consumption subsides. Given the chance, the market will recreate both conditions the cheapest way possible. High prices do not demonstrate the need for government action, which inevitably interferes with the market’s self-correcting mechanisms.
Yet action by government, in deliberate subversion of the market and in direct conflict with national need, is what the House has just passed. The bills raise taxes on providers of oil and gas in order to subsidize much costlier energy forms with far less potential to boost total energy supply. They treat as a pariah the industry that should be investing heavily in production, refining capacity, and pipelines if future US energy needs are to be met. And they mandate sales of politically favored energy types, assigning government the role of telling individuals what to buy and producers what to sell.
“The House propelled America’s energy policy into the future,” crowed House Speaker Nancy Pelosi (D-Calif.) after the bills passed. Wrong. The House repeated past mistakes. At enormous cost to Americans, its mischief would keep the energy market from evolving as it should: as an economic process that summons into affordable use renewable and other new energy forms as essential supplements to traditional supply, which must be allowed to grow.
Democrats have played their ludicrous hand. Someone now needs to remind a strangely frenzied national capital that the best energy policies are those that rely on the free interplay of supply, demand, and price. It’s up to Republicans, if any of them will do it, to assert the market principles they once claimed to believe.
President’s role
President George W. Bush should take the lead. Nothing constructive can come from reconciliation of the House mess with a little-better energy bill passed earlier by the Senate. Bush should promise a veto. And he should anchor his reasons in arguments steeped in a recommitment to a free energy market.
This will require some backtracking. Bush set the country on a federally charted energy course in his 2006 state-of-union address, in which he groaned about the country’s being “addicted to oil” and took aim at the impossible target of ending US dependence on oil from the Middle East. Since then, US energy policy-making has been a mad rush after energy fantasies and federal dollars.
Bush was wrong to deploy the addiction analogy. He has erred since with his hop-scotching mandates for ethanol and other renewable boondoggles. But he doesn’t have to say so or express regret. He just needs to use his veto to stop a Congress that has lost all sense on energy and to explain himself within a market perspective that the nation can only hope he hasn’t forgotten.
