Volatile Oil Prices Don’t Have a Long Term Fix
While complaining about oil prices has been quite the popular subject in recent years, it is rare that the government has attempted to alleviate the seemingly never-ending roller coaster that is gas prices today.
Of course, recent spikes are also due to hurricanes Katrina and Rita, although I’m not one to complain about the side effects of a national disaster.
In order to address complaints of high gas prices, the Gasoline for America’s Security Act, which was designed by Republicans, passed narrowly on Oct. 7 in the House of Representatives.
While voting on the bill was supposed to be open for about five minutes, House leadership kept it open for 45 minutes, waiting for key Repulican leaders to work the floor, getting moderate Repulicans to switch their vote.
In other words, conservative Republicans have a very strong interest in seeing this bill passed and enacted.
The bill is currently in the Senate and it has yet to be voted on.
At first glance, it seems like a logical solution that applies basic supply-and-demand economics to the problem.
This act would allow oil companies to open new oil refineries, which in turn would increase supply and lower the price of oil. Then why was this bill passed with such a narrow margin (212-210), meaning Democrats, as well as many moderate Republicans opposed this bill?
First and foremost, this bill chooses to ignore one of the most important reasons for high oil prices: The oil companies purposely avoid producing to full capacity in order to raise already sky-high profits. In fact, it actually gives incentives to companies to open more refineries.
In fact, Exxon Mobil recently reported third-quarter profits of nearly $10 billion, which is a record-setting increase for U.S. companies
More specifically, it allows the president to designate sites on federal land for construction of new oil refineries.
Then, you may ask, how does this benefit big oil companies and, thus, conservative Republicans?
This bill also rolls back some of the standards required by the Clean Air Act, at the discretion of the president.
There are a few positive points of this act.
For example, it establishes a program to encourage carpools by giving grants to states and to evaluate the use of the Internet to set up carpool opportunities.
Moreover, it sets penalties of up to $11,000 for over charging for oil, gasoline or diesel fuel during a major disaster and it even gives $2.5 million to create an education program teaching gasoline conservation.
But, of course, all these potentially beneficial points of the bill come with the harmful.
By far, one of the most conveniently ignored aspects of the bill is that it addresses the problem of gas prices within a long-term framework.
As our nation recovers from the recent national disasters, prices will eventually drop, as many of us have already noticed.
And truth be told, prehurricane prices were not economy-crippling. On average, Americans pay less for than a lot of Western industrialized nations.
The volatile nature of gas prices simply doesn’t make it logical to plan for a long-term fix to specific problems contributing to gas price increases.
By the time this bill has any affect on gas prices, if at all, prices will possibly have already fallen. And, of course, the extra power given to the president, including rolling back Clean Air Act requirements and allowing the federal government to sign on contracts with private companies, will be a convenient way to put more power in the hands of big business.
Maya Debbaneh is a fourth-year political science major. She can be reached at email@example.com.