The editor’s opinion from Marketplace, Northeast Wisconsin’s business magazine. (Obligatory disclaimer: Most hyperlinks go to outside sites, and we’re not responsible for their content. And like fresh watermelon, peaches, pineapple, grapefruit, tomatoes and sweet corn, hyperlinks can go bad after a while.)

May 21, 2008

Your Tax Dollars at Work, Gas Prices Edition

In a previous post here, I wrote that “Anyone who thinks Democrats are going to do anything to reduce gas prices hasn’t been paying attention.”

Apparently I was mistaken. U.S. Rep. Steve Kagen (D–Appleton) has come up with a new approach, something he got 323 of his colleagues in the House of Representatives (one of whom is Rep. Tom Petri (R–Fond du Lac)) to sign on to — sue OPEC:
The Gas Price Relief for Consumers Act sponsored by Congressman Steve Kagen, M.D. was approved overwhelmingly [Tuesday] by the House of Representatives by a vote of 324-84. One hundred three Republicans supported the bill that would put in place the means to crackdown on possible anti-competitive practices that could be contributing to the current record-high gas prices.

The Gas Price Relief for Consumers Act of 2008 would allow the United States to sue foreign oil cartels for anti-competitive price discrimination. It would also allow the Department of Justice Antitrust Task Force to aggressively investigate both gas price gouging and market manipulation.

“Until we finally have an energy policy other than drill-and-burn, this bill will begin to set things right for the American people,” Kagen said. “We cannot drill or grow our way out of this energy crisis. We must begin to think differently in America. That includes loosening the stranglehold other nations have on our economy and exploring new forms of energy.”

The Gas Price Relief for Consumers Act of 2008 … authorizes the creation of the Department of Justice Petroleum Industry Antitrust Task Force. Among its responsibilities, the Task Force will examine such issues as the existence and effects of price gouging in the sale of gasoline, anticompetitive price discrimination by petroleum refiners, actions to constrain oil supplies in order to inflate prices, and possible oil price manipulation in futures markets. …

“This legislation will address the loopholes and exemptions that oil companies exploit at the great expense of our citizens,” said Kagen. “By passing The Gas Price Relief for Consumers Act, the House agrees that it is time to give U.S. authorities the ability to prosecute anticompetitive conduct committed by international cartels that restricts supply and drives up prices. OPEC, the world’s most well known oil cartel, accounts for more than two-thirds of global oil production, and OPEC’s oil exports represent about 65 percent of the oil traded internationally.”

Words fail me as to how laughable, stupid and naïve this really is. I’m curious as to which court outside the U.S. Kagen believes would hear this case. Kagen may be shocked to find out that the jurisdiction of U.S. courts does not extend beyond the borders of the U.S. or to non-American citizens. (Apparently, none of Kagen’s colleagues who are lawyers bothered to tell him this.) Kagen also may be surprised to discover that not even an act of Congress can overturn the laws of supply (artificially restricted due to bans on drilling and environmental regulations that have prevented new refineries from being built) and demand (increasing from growing economies outside the U.S.).

The White House says targeting OPEC in the courts “would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners.” I’m not sure if that’s the case (why would OPEC shut off one of its largest customers?), but it certainly will not do anything at all to reduce gas prices. Had Kagen’s Democratic buddies not prevented U.S. oil companies from being able to drill for oil in new locations in this country over the past three decades, then gas prices might not have increased, in Wisconsin, 65 percent since Democrats took control of Congress in early 2007.

“As the Federal Trade Commission has reported, changes in world oil prices have explained 85% of the changes in the price of gasoline in the U.S.,” says U.S. Rep. Steve King (R–Iowa). “The price of gas at the pump closely tracks the price of a barrel of oil in the world market. Further, the FTC has repeatedly found that there is no broad-based collusion to fix prices or engage in price gouging in the retail sale of gasoline.”

If I were in Congress, I would be embarrassed to have my name attached to Kagen’s waste of time. Kagen must have a low estimation of the intellects of Eighth Congressional District voters to believe this will get him more votes in November.

Kagen is right about one thing: “We must begin to think differently in America.” That should begin with sending Kagen back to his medical practice Nov. 4.

UPDATE: July light crude futures sold today for $133.17 per barrel, up $4.19 from yesterday. Apparently the world oil markets are unimpressed with Kagen’s bill as well.

No comments: