Good Question
John at Powerline asks: "Wasn't There a Time When Republicans Knew Something About Economics?"
The post looks at the "Gas Price Relief and Rebate Act of 2006", and John opines, "it's not pretty".
I think John has overstated the quality of this bill somewhat - it's a train wreck of pandernomics.
$100 tax rebate? Check.
Endless investigations into gouging (whatever that is)? Check.
Contradictory tax incentive juggling? Check.
Tax incentives to build facilities that environmentalists will never allow? Check.
Did we really elect these numbskulls? This plan is just plain dumb on several levels. The only thing that makes sense (ANWR drilling) is also the most likely item to get left out of the final version.
Not that this is original, but here is the plan for gas price relief that I'll support:
1. Allow the oil industry to drill and build refining capacity.
2. Cut both state and federal taxes on gasoline.
It's funny that the biggest argument against replacing income tax with a national sales tax has always been that consumption taxes are regressive, hitting the poor much harder than the middle or upper classes. Yet there seems to be no such noble motive in play when it comes to energy. This isn't like tobacco or alcohol - gas is a necessity. There is gas price gouging - the shame is, the FTC won't see it because congress will tell them to look at the oil industry instead of the government. How can the oil industry's measly 9 cents per gallon profit be "price gouging" when state and federal government get a combined average of 60 cents?
I can't improve on John's closing sentiment:
Look at it this way: if the oil companies agreed among themselves not to drill for oil in new locations like ANWR, and not to build new refineries, so as to limit the supply of oil and thereby drive prices higher, it would be illegal; indeed, it would be the greatest price-fixing conspiracy in American history. But it isn't the oil companies that have conspired to limit supply and thereby drive prices higher. It is our government that has foreseeably, if not intentionally, achieved this ignoble end.
