Big Oil Over America

A clip from today's Progress Report:

In 2000, George W. Bush campaigned "on a promise that he would persuade OPEC to keep oil supplies plentiful." Bush promised he would "'jawbone' OPEC members by calling them and saying 'we expect you to open your spigots.'" But as OPEC slashes production and prices at the pump skyrocket, it seems that the President's pledge was all talk. While Saudi officials did visit the White House yesterday, they had already "led the push to cut OPEC production by 1 million barrels per day starting in April" and refused to formally reverse their position. Meanwhile, the President refused to "personally lobby oil cartel leaders to change their minds" about the production cut, with Energy Secretary Spencer Abraham "declining to respond to repeated questions on whether the president had specifically spoken with leaders of Saudi Arabia." One explanation for the Administration's hands-off attitude towards Saudi Arabia: President Bush's close ties with the regime.

RECKLESS FISCAL POLICY LEADS TO HIGHER GAS PRICES: While the President and his surrogates demagogue the issue of rising gas prices, their own irresponsible fiscal and monetary policies are partly to blame. In the last two years, "the price of oil in dollars rose by 51%...but it rose by only 4% in euros." Why? According to two scholars at the Century Foundation "a declining U.S. dollar that's worth less in the international market is an important cause of the run-up in oil prices." The dollar is slumping in part because of a glut of U.S. Treasury bonds caused by "enormous deficits generated by tax cuts, increases in spending and sluggish economic performance." The weak dollar is also a reflection of "falling international confidence in U.S. [fiscal] policy." Unfortunately, "the Bush administration is doing little about it."

PLAN B – TRASH THE ENVIRONMENT: Instead of applying diplomatic pressure to Saudi Arabia, the Administration is again considering putting public health at risk by waiving clean air regulations. Ordinarily, states that fail to meet federal clean air requirements must use specially blended gas during the summer to reduce air pollution. But Energy Secretary Abraham confirmed yesterday that the Administration is considering not requiring states that violate federal clean air requirements to use the special gas. The move could marginally lower prices in some states but may also expose people in some states to even higher levels of dangerous air pollution.

PLAN C – ROLL OUT FAILED POLICIES: The Bush Administration has repeatedly failed to get its energy bill through Congress – a multi-billion-dollar package of tax breaks and incentives for big energy companies crafted in secret by Vice President Dick Cheney and executives like former Enron CEO Ken Lay. Yesterday, Press Secretary Scott McClellan said that, had the Administration's bill passed, "we wouldn't be in this mess now." But, as Sen. Jeff Bingaman (D-NM) notes, there is nothing in the bill "that would have effect on gas prices in the short term at all, or affect them substantially in the long-term either." Specifically, the legislation "does nothing to increase refining capacity, ease problems with so-called boutique fuels or reduce oil imports."

TAX BREAKS FOR GAS GUZZLERS: Meanwhile, the Bush Administration has made the U.S. more dependent on OPEC by providing incentives for Americans to buy cars that use the most gas. The President's 2003 "economic stimulus" package allowed business owners and the self-employed to deduct the cost of large SUVs (weighing 6,000 pounds or more) - up to $100,000 – quadruple the previous amount. That means it is possible to buy the Hummer H2, which goes for a minimum of $50,000 and gets 10 miles to the gallon, and deduct the entire amount. Meanwhile, the tax incentives for hybrid gas-electric cars remain paltry. The result is that "American buyers continued to shift from passenger cars to the largest and least fuel-efficient new vehicles that auto manufacturers offer, even as gasoline prices soar."

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