The Democrats’ Many Gas Price Bogeymen

Democrats Are Desperate to Distract from Their War on Energy That is Keeping Gas Prices High

• President Obama yesterday attempted to distract from his war on energy by deflecting blame for rising gas prices.
• Evidence shows that the Democrats’ calls to increase oil and gas taxes would hurt small businesses and working families while raising gas prices.
• Democrats refuse to stop pushing anti-energy policies that sabotage new domestic energy production and cause high gas prices.

President Obama yesterday attempted to distract from his war on energy by deflecting blame for rising gas prices:

GAS PRICES RISE, OBAMA WANTS TO CREATE YET ANOTHER “TASK FORCE” TO EXAMINE “OIL SPECULATION”: “President Barack Obama announced Tuesday that he has asked Attorney General Eric Holder to ‘reconstitute’ a task force examining oil and gas speculation.” (Dan Froomkin, “Obama Fights Gas Prices By ‘Reconstituting’ Oil Speculation Task Force,” The Huffington Post, 3/6/2012)

WE’VE SEEN THIS MOVIE BEFORE—OBAMA CALLED FOR A SIMILAR TASK FORCE WHEN GAS PRICES SPIKED LAST YEAR BUT GROUP “MET ONLY A HANDFUL OF TIMES,” “NEVER REPORTED TO PUBLIC”: “When oil and gasoline prices soared last April, President Barack Obama announced to fanfare that the Department of Justice would lead a task force designed to root out manipulation of the oil market and gouging of consumers at the gas pump.

“Since then the group has met only a handful of times and has never reported to the public.” (Kevin G. Hall, “Whatever Happened to Oil and Gas Speculation?”,McClatchy DC, 3/1/2012) 

AND LAST WEEK, OBAMA CALLED FOR INCREASING TAXES ON OIL AND GAS PRODUCERS: “President Barack Obama, turning his political sights on snowy New Hampshire, demanded that Congress eliminate oil and gas company subsidies that he called an outrageous government ‘giveaway.’” (Ken Thomas and Kasie Hunt, “Obama Demands Congress End Oil, Gas Subsidies,” CBS News, 3/1/2012)

Evidence shows that the Democrats’ calls to increase oil and gas taxes would hurt small businesses and working families while raising gas prices:

PREVIOUS INVESTIGATIONS HAVE FOUND NO EVIDENCE THAT “SPECULATION” IS BEHIND GAS PRICE INCREASE:

PRICE INCREASES “LARGELY DUE TO FUNDAMENTAL SUPPLY AND DEMAND FACTORS,” “DOES NOT SUPPORT” IDEA THAT SPECULATION HAS “DRIVEN CHANGES IN OIL PRICES”: “The Task Force’s preliminary assessment is that current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors. While these increases broadly coincided with the run-up in crude oil prices, the Task Force’s preliminary analysis to date does not support the proposition that speculative activity has systematically driven changes in oil prices.” (“Interim Report on Crude Oil,” Interagency Task Force on Commodity Markets, July 2008)

“VAST MAJORITY” OF FEDERAL TRADE COMMISSION’S INVESTIGATIONS FOUND “MARKET FACTORS” RESPONSIBLE FOR GAS PRICE CHANGES: “The vast majority of the FTC’s investigations have revealed market factors to be the primary drivers of both price increases and price spikes.” (“Gasoline Price Changes: The Dynamic of Supply, Demand and Competition,” Federal Trade Commission, 2005)

DEMOCRATS’ POLITICAL GIMMICKRY ON OIL & GAS TAX INCREASES MAY ACTUALLY INCREASE GAS PRICES, HURT SMALL BUSINESSES:

CONGRESSIONAL RESEARCH SERVICE CONCLUDED DEMOCRATS’ POLITICAL GIMMICKRY COULD ACTUALLY INCREASE OIL PRICES AND FOREIGN OIL DEPENDENCY: “Last year, a report by the nonpartisan Congressional Research Service that was getting renewed attention on Thursday concluded that Obama’s oil and gas proposals ‘may have the effect of decreasing exploration, development, and production, while increasing prices and increasing the nation’s foreign oil dependence.’” (Julie Pace, “Obama Demands Congress End Oil, Gas Subsidies,” Associated Press, 3/1/2012) 

DEMOCRATS’ PROPOSED TAX INCREASES WOULD HIT SMALL BUSINESSES HARD: “All natural resource minerals, from coal to gold to sand and gravel, are eligible for a percentage depletion income tax deduction. Percentage depletion for natural gas and oil has been in the tax code since 1926. Unlike percentage depletion for other mineral resources, natural gas and oil percentage depletion is highly limited. It is available only for American production, only for independent producers and royalty owners, limited to the first 1,000 barrels per day of production, limited to the net income of a property, and limited to 65 percent of the producer’s net income. Percentage depletion provides capital primarily for smaller independents and thus is particularly important for marginal well operators. Eliminating percentage depletion would remove capital that would have been invested in maintaining and developing American production. Many royalty owners are farmers, ranchers and retirees who rely on their royalties for essential supplement income.” (“Revising Historic Tax Policies for American Oil and Natural Gas Production Will Cost the Country,” IPAA, Accessed 3/7/2012) 

70 PERCENT OF OIL COMPANY OWNERSHIP IS BY “MIDDLE-CLASS AMERICAN HOUSEHOLDS”: “Our analysis of SEC data on the ownership of U.S. oil and natural gas companies demonstrates that company insiders – corporate officers, senior executives and board members – have very small holdings in the companies they manage.  Nearly 70 percent of the shares of these companies are held by institutional investors, especially asset management companies, and predominantly on behalf middle-class American households who own shares through mutual funds, pension funds and retirement accounts. Individual investors who manage their own portfolios and are not company insiders account for almost 30 percent of all industry ownership, which again includes significant numbers of middle-class households  holding IRA and other personal retirement accounts.” (Robert Shapiro and Nam Pham, “The Distribution and Ownership of U.S. Oil and Gas Companies,”Sonecon, Inc., Sep. 2007) 

DEMS’ TAX INCREASE WILL HURT CONSUMERS “AT THE LOWER END OF THE ECONOMIC SPECTRUM”: “Indeed, trying to punish the oil industry with higher taxes will in the end only wind up punishing consumers — particularly those at the lower end of the economic spectrum.” (“Punishing Big Oil Won’t Cut Prices,”Investor’s Business Daily, 5/5/2011) 

OBAMA IN 2006: “THE EASIEST THING IN THE WORLD” IS TO CRITICIZE OIL COMPANIES: “Going after the oil companies “may be sufficient to get us through this election, but after the election, people then are going to say, ‘OK smart guy, what are we going to do about energy?’ ” (“Obama in ’06: ‘The Easiest Thing in the World’ is to Criticize Oil Companies,” Buzzfeed, 3/1/2012)

Democrats refuse to stop pushing anti-energy policies that sabotage new domestic energy production and cause high gas prices:

SEN. MARY LANDREIU (D-LA): SMALL BUSINESSES ARE SUFFERING BECAUSE OF OBAMA’S DRILLING MORATORIUM, NOT “BIG OIL COMPANIES”: “I want to say that, despite the administration’s arguments that are laid out, that you all are all guns blaring and green lights for drilling, the facts that I checked, and if you disagree tell me, only 21 permits for offshore drilling have been issued by this date. In 2010, there were 32 permits. I just left the annual conference of LOGA, which is Louisiana Oil and Gas Association, Mr. Secretary, yesterday. They are beside themselves with not being able to get their permits processed and to answer you, Mr. Franken, let me just say Exxon and Shell may be making record profits but according to a study recently done by the Greater New Orleans, Inc., 41 percent of our oil and gas independent operators and service companies, I’m not talking about Exxon and Shell that have operations all over the world, I’m talking about companies in the Gulf Coast, in Texas, Mississippi, Louisiana, and Alabama. Let me tell you what the studies show about their profits: 41 percent of them are not making a profit at all, 70 percent have lost significant cash reserves, 46 have moved operations away from the Gulf, and 82 percent of business owners have lost personal savings as a result of this slow down.” (Remarks from Sen. Mary Landrieu,U.S. Senate Hearing, 2/28/2012)

GULF BUSINESSES FRET THAT “PERMITORIUM” REMAINS IN PLACE:“They’re calling it a ‘permitorium’ caused by stricter regulations that are allowing gulf drilling, but at a snail’s pace, in both deep and shallow water.”(Katie Moore, “New Study: Small Businesses Hit Hardest by Drilling Delays,” WWL TV, 1/31/2012)

RECENT ISSUANCE OF NEW LEASES AT ONE-THIRD OF HISTORICAL AVERAGE: “According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.”(Editorial, “ ‘Stupid’ and Oil Prices,” The Wall Street Journal, 2/24/2012)

OFFSHORE LEASING MUCH MORE DIFFICULT, SLOWER UNDER OBAMA POLICIES: “Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.” (Editorial, “ ‘Stupid’ and Oil Prices,” The Wall Street Journal, 2/24/2012) 

“THE ANTI-JOBS PRESIDENT” REJECTED JOB-CREATING KEYSTONE PIPELINE:(Editorial, “The Anti-Jobs President,” The Wall Street Journal, 1/19/2012)

CFR: “IF CANADA CAN’T PRODUCE THIS OIL, WE’LL HAVE HIGHER OIL PRICES THAN WE OTHERWISE WOULD”: “ ‘If Canada can’t produce this oil, we’ll have higher oil prices than we otherwise would,’ says Michael Levi, senior fellow for energy at the Council on Foreign Relations.” (Guy Raz and Brent Baugman, “What Happens If The Keystone XL Pipeline Isn’t Built?”, National Public Radio, 2/26/2012)

NATIONAL JOURNAL ANALYSIS: “U.S. ECONOMY MISSED OUT ON CREATING UP TO A QUARTER-MILLION JOBS” IN 2011 BECAUSE IT “LACKED [ENERGY] INFRASTRUCTURE”: “The U.S. economy missed out on creating up to a quarter-million jobs this year because it lacked the infrastructure to capitalize on a rare divergence in global oil prices, a National Journal analysis shows.” (Jim Tankersley, “A Crude Hit to the Recovery,” National Journal, 11/29/2011)

INCREASING ENERGY INFRASTRUCTURE THROUGH KEYSTONE XL WOULD LIMIT PRICE SPIKES IN FUTURE: “There’s no evidence that the oil industry manipulated the price spread to boost refining profits; the companies just appear to be benefiting from the nation’s inability to move cheaper oil around freely. Energy industry groups say expanding America’s pipeline infrastructure – including potential Obama administration approval of the Keystone XL pipeline to carry oil south from Canada – would minimize the odds of another wide price split in the future.” (Jim Tankersley, “A Crude Hit to the Recovery,” National Journal, 11/29/2011)