With gasoline prices continuing to climb, there is an ever-increasing quest for ways to find a culprit that can carry the blame.
More and more, the finger pointing is focused on the overseas sale of US petroleum product—with the belief being that selling American resources to the highest bidder increases the price of gasoline at the pump. This idea has made strange bedfellows of Fox News host Bill O’Reilly and Congressman Ed Markey (D-MA).
Addressing gas prices, O’Reilly claims: “They are much higher because the oil companies are shipping their products overseas.” Representative Markey (of the Waxman-Markeycap and trade fame) has “introduced legislation that would end the exportation of oil extracted from taxpayer-owned lands, and the exportation of refined fuels like gasoline produced from America’s oil.” Markey’s bill is called the “Keep America’s Oil Here Act.”
The idea has gained traction. Letters to the editor have popped up echoing the sentiments—with one even proposing “a massive letter-writing campaign to Congress insisting it creates a law that prevents the export of our gasoline and fuel oil.”
I was alerted to the trend by “Chip” who wrote the following in response to one of my columns: “So why is no one suggesting a tax on domestically produced oil, natural gas, or coal if sold overseas. With all of our natural energy resources, why let it count for so little if global demand will dictate that we pay the same general rates for oil, coal, and gas as anywhere else…”
Whether we have a bill like Markey’s that mandates that resources extracted from federal lands be sold in the US or a tax as Chip suggested, the idea that selling domestically produced resources overseas is driving up prices is being propagated from someone, somewhere and is accepted as fact.
With the Obama re-election campaign being staked on raising taxes, it may well be coming straight from the White House. Markey’s “Keep America’s Oil Here Act” tells us that the Democrats have bought into the theme of discouraging exports of US product—whether through regulation or tariff.
Wherever this “protectionism” idea is coming from, it is wrong on many counts. While keeping American oil here sounds like it would lower prices, it will not impact the price and could hurt the overall economy.
India recently enacted a law blocking exports of cotton, to drive down domestic prices. First people to get shafted with the scheme were the cotton farmers, who likely will decrease cotton acreage next season. There are many examples of this sort of thing.
Do that thing with domestic oil, you get the same result. Domestic oil producers will cut oil production in response to lower margins on sales. Results: no reduction in the price of gasoline for consumers.
The most credible explanation I’ve seen for the rise of oil prices is a problem with US currency. Nearly all international trade in oil is conducted using US dollars as the medium of exchange. Obama’s massive budget deficit is reducing the value of the dollar, which means that it takes more dollars to buy/sell a barrel of oil, anywhere. Which naturally increases the price of gasoline.
I would put more blame on Bush’s ridiculous tax cuts and wars.
If the government can halt the export of oil and refined products what is to prevent it from halting other US manufactured goods like steel, Oh, we don’t make much steel any more.