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Morning Bell: Pelosi Asks, We Answer

Posted By Conn Carroll On August 7, 2008 @ 8:54 am In Ongoing Priorities | Comments Disabled

Feeling pressure from the House [1]Republican [1]revolt on energy prices [1], Speaker Nancy Pelosi took time from her busy book tour — current Amazon sales rank [2] No. 1,631, and priced to sell at $16.29, down from the original $23.95 — to release a “Top Ten Questions for the House GOP on Energy [3].” The first thing one notices about these “10″ questions is that there are only nine of them. But leaving math aside, and ignoring two political questions addressed to John McCain and past Congresses, here are policy answers to the remaining 7 questions:

1. House Democrats have put forward 13 major proposals that would increase supply, reduce prices, protect consumers and transition America to a clean, renewable energy-independent future. … How can Republicans claim to want to help consumers and businesses when they oppose these policies?

Of the 13 proposals Pelosi cites, only three could possibly claim to increase energy supply. Two of them involve either tax incentives or increased government investment in renewable energy. We’ll address renewable energy mandates below (see question No. 9). Pelosi also cites her efforts to require “oil companies to drill on 68 million acres they already control.” This is the silliest claim of all. Oil companies can only drill where oil is. There are 9.4 billion acres on the moon [4]. Pelosi could require oil companies to drill there, but it wouldn’t produce one drop of oil.

2. Releasing a small amount of oil from the Strategic Petroleum Reserve has proven in the past to be a critical way to reduce energy prices in the short term used in 1991, 2000 and 2005. Why not support Democrats’ effort to free a small amount of the taxpayer-funded government stockpile to influence the price of the pump within days?

Releasing oil from the SPR could reduce gas prices; but how big of a reduction and for how long directly depends on how much is released. The United States could release 3 million to 4 million barrels per day, which would lower prices at the margin, but the SPR could maintain that pace for no more than six months [5]. After that, the price of oil would return to its previous level, and the SPR would be empty. And at what cost? Our nation’s security would be at the total mercy of Hugo Chavez, Vladimir Putin and the oil states of the Persian Gulf [6].

3. Exxon Mobil announced the highest ever quarterly profit by a U.S. corporation in history last week. With Exxon Mobil making $1,500 a second, how can House Republicans continue to block efforts to repeal tax subsidies to Big Oil?

Ranking all industries by profit margin, [7] oil and gas production is 60th. That means there are 59 other industries that are more profitable than the oil industry [8]. Exxon Mobil already pays more taxes than the bottom 50% of taxpayers [9] and the company invested a record $25 billion [10] in capital and exploration spending this year.

4. According to the Bush Administration’s own Energy Department, if we repealed the offshore drilling ban today, oil and gas production would not begin there until 2017, and the impact on prices before 2030 would be “insignificant.” Why do House Republicans keep calling for an action that they know won’t solve today’s energy problems?

Pelosi does not provide a citation here, but we think she is referring to this Energy Information Administration (EIA) report [11]. If so, Pelosi has her facts wrong. The report clearly states it is only looking at the Outer Continental Shelf ban being lifted in 2012. So Pelosi is just dead wrong when she says the EIA says production would not begin until 2017. If the ban were lifted today, production could begin in 2013. More importantly, though, Pelosi shows she does not understand commodities markets. It is well established that present prices are impacted by anticipated future supply change [12].

6. If House Republicans are for “all of the above,” why do you oppose efforts to protect consumers like price gouging and holding OPEC accountable for price fixing?

Price gouging in all industries is already illegal under existing antitrust laws [13].

8. Democrats will continue to push for legislation to end undue speculation in the oil market that many analysts say has increased the price of a barrel of oil. Will House Republicans support it?

The Commodity Futures Trading Commission released a report [14] in July, which found no evidence that institutional investors were driving up oil prices. Don’t believe the government? Both the New York Times editorial board [15] and liberal columnist Paul Krugman [16] have debunked the idea that restricting commodity markets will lower energy prices.

9. House Democrats have reiterated their support for a Renewable Electricity Standard to transition electricity sources to renewables. Will House Republicans support this effort?

Renewable energy accounts for 7% of U.S. energy consumption [17]. Once you throw out hydropower (since Pelosi’s leftist allies are bent on shutting dams and not building new ones [18]), renewable energy accounts for only 4% of U.S. energy consumption [19]. Biomass is at best suspect as “renewable” source since up to 74% of its energy actually comes from the coal and natural gas sources needed to convert into fuel [20]. Not to mention biomass’ role in world hunger crisis [21]. Throw out biomass, and renewables contribute less than 1% of America’s energy [19] — nowhere near enough to meet U.S. energy needs.

Quick Hits:

  • House Republicans are gearing up to continue their revolt [22] of Congress’ adjournment right up to the start of the Democratic Convention in Denver.
  • Russia is fighting to give Iran more time [23] to respond to U.S. and European efforts to end Tehran’s uranium enrichment efforts.
  • Riot police used tear gas on hundreds of Venezuelans protesting [24] new moves by President Hugo Chavez to concentrate his power.
  • Government-sponsored entity Freddie Mac announced yesterday that its losses from failed home loans doubled to $2.8 billion [25] in the quarter ending June 30.
  • According to Rasmussen Reports [26], 46% of Americans say affirmative action programs are no longer necessary compared to 32% who want to see them continued.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/08/07/morning-bell-nancy-asks-we-answer/

URLs in this post:

[1] House : http://www.politico.com/blogs/thecrypt/0808/Dems_launch_counterattack_to_GOP_oil_protest.html

[2] Amazon sales rank: http://www.amazon.com/Know-Your-Power-Americas-Daughters/dp/0385525869/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1218108174&sr=8-1

[3] Top Ten Questions for the House GOP on Energy: http://speaker.gov/newsroom/reports?id=0064

[4] There are 9.4 billion acres on the moon: http://online.wsj.com/article/SB121478199392114387.html?mod=opinion_main_review_and_outlooks

[5] but the SPR could maintain that pace for no more than six months: http://www.heritage.org/Research/EnergyandEnvironment/wm1774.cfm

[6] Our nation’s security would be at the total mercy of Hugo Chavez, Vladimir Putin and the oil states of the Persian Gulf: http://www.heritage.org/Research/EnergyandEnvironment/wm1920.cfm

[7] Ranking all industries by profit margin,: http://biz.yahoo.com/p/sum_qpmd.html

[8] there are 59 other industries that are more profitable than the oil industry: http://mjperry.blogspot.com/2008/08/oil-industry-ranks-60-by-profit-margin.html

[9] pays more taxes than the bottom 50% of taxpayers: http://mjperry.blogspot.com/2008/08/putting-exxons-income-taxes-in.html

[10] a record $25 billion: http://mjperry.blogspot.com/2008/08/exxons-record-capital-and-exploration.html

[11] this Energy Information Administration (EIA) report: http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

[12] present prices are impacted by anticipated future supply change: http://www.foundry.org/2008/07/29/already-known-to-economists-%e2%80%a6-but-not-to-the-democratic-policy-committee/

[13] Price gouging in all industries is already illegal under existing antitrust laws: http://www.heritage.org/Research/EnergyandEnvironment/wm1469.cfm

[14] report: http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/itfinterimreportoncrudeoil0708.pdf

[15] editorial board: http://www.nytimes.com/2008/07/28/opinion/28mon2.html?scp=1&sq=oil+speculation&st=nyt

[16] Paul Krugman: http://www.foundry.org/2008/06/27/demand-not-speculation-causing-rise-in-oil-prices/

[17] 7% of U.S. energy consumption: http://www.eia.doe.gov/fuelrenewable.html

[18] are bent on shutting dams and not building new ones: http://www.reuters.com/article/bondsNews/idUSN2425642220070725

[19] 4% of U.S. energy consumption: http://www.eia.doe.gov/emeu/aer/txt/ptb0103.html

[20] up to 74% of its energy actually comes from the coal and natural gas sources needed to convert into fuel: http://72.14.205.104/search?q=cache:uqJhls25L1YJ:rael.berkeley.edu/ebamm/FarrellEthanolScience012706.pdf+Ethanol+Can+Contribute+to+Energy+and+Environmental+Goals&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a

[21] biomass’ role in world hunger crisis: http://www.foundry.org/2008/07/15/from-biofuels-to-biofailure/

[22] continue their revolt: http://thehill.com/leading-the-news/gop-planning-to-revolt-right-up-to-dem-convention-2008-08-06.html

[23] fighting to give Iran more time: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/06/AR2008080601085.html

[24] used tear gas on hundreds of Venezuelans protesting: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/08/06/international/i161222D89.DTL

[25] doubled to $2.8 billion: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/06/AR2008080600725.html

[26] Rasmussen Reports: http://www.rasmussenreports.com/public_content/politics/election_20082/2008_presidential_election/affirmative_action_important_to_54_of_voters_58_reject_programs_that_give_special_treatment

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