Doing The Bidding For The Oil And Financial Sectors


Which is the GOP more dedicated to- the oil industry or the financial services industry?

On behalf of the oil industry: A procedural vote which would have enabled debate on S 258, the Close Big Oil Tax Loopholes Act, was defeated in the U.S. Senate on Thursday when it received only 52 votes, eight short of the needed 60. Oil companies receive approximately $2 billion a year in "incentives" and made approximately $38 billion in profits in the first quarter of 2011, The bill would have applied to the five largest, most profitable multinational oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips.

The debate on the motion to proceed to consider the bill to return some money to the Treasury received two (2) "aye" votes (the ladies Maine) from the (when convenient) party of deficit obsession, leaving 45 Republicans voting in favor of their oil industry benefactors. Fifty (50) Senators who caucus with the Democratic Party voted in favor of discussing a bill to end the tax breaks, with two (Mary Landrieu and Mark Begich) who voted with the GOP/oil industry representing states dominated by the oil industry.

Is there any mystery why nearly every Republican voted with the industry? As the chart, below, from the Center for Responsive Politics via DailyKos illustrates, the top six, and 12 of the top 13, recipients of campaign contributions from the oil and gas industries since 1989 are Republicans. Each of them voted no, as did Landrieu, the only Democrat, at #7, to crack the 13. The bottom 13 are all Democrats (including Independent Bernie Sanders, one of the few authentic Democrats left in the Senate) and they all voted to discuss the issue.




Loathe to admit they are doing the bidding of the corporate sector, Republicans instead argued, against all evidence, that removing the "incentives" would cause the price of gas to rise, presumably more than the roughly 27% it has risen in the past year, in presence of those "incentives." Supply contributed far, far less to the increase than have other factors, including speculation. As Reuters' David Sheppard explains

Goldman estimated in a research note on March 21 that every million barrels of oil held by speculators contributed to an 8-10 cent rise in the oil price. As unrest spread in North Africa and the Middle East, investors accumulated the equivalent of almost 100 million barrels of oil between mid-February and late March on top of their existing positions, adding approximately $10 to the 'risk premium', Goldman said.

The U.S. Commodity Futures Trading Commission said that as of last Tuesday, hedge funds and other financial traders held a total net-long positions in U.S. crude contracts equivalent to a near record 267.5 million barrels.

Using Goldman's estimates, that indicates the total speculative premium in U.S. crude oil is currently between $21.40 and $26.75 a barrel, or about a fifth of the price.

Pursuant to the Dodd-Frank financial reform law, speculation in the oil futures market could be restricted by the U.S. Commodity Futures Trading Commission, whose chairman earlier this year asserted "We could have helpful limits in place that could guard against markets being adversely impacted by excessive speculation. We could do that now if we wanted. And, as you can tell, I want." But as Pat Garofalo notes at Think Progress

even assuming the CFTC follows through with implementing the law, it will be hard pressed to enforce any limits if the budgets cuts envisioned by House Republicans are actually enacted. H.R. 1, the House Republican approved spending plan for the remainder of 2011, includes a nearly one-third cut in the CFTC’s budget. Such a draconian cut would require the CFTC to lay off more than 30 percent of its staff. “We’d have to have significant curtailment of our staff and resources,” CFTC Chairman Gary Gensler said. “We would not be able to police…or ensure transparent markets in futures or swaps.”

House Republicans are doing their share. On May 4

splitting along party lines, the House Agriculture Committee voted to delay by 18 months implementation of rules governing derivatives, the kind of complex financial instruments that were blamed for putting the financial system in jeopardy. The bill would require regulators to gather additional comments and further examine the potential downside of the rules.

Committee Chairman Frank D. Lucas (R-Okla.) said in a statement that he was trying to avoid rushed rulemaking. “We can’t ignore the concerns of businesses that we’re relying on to further our economic recovery,” Lucas said.

Translation: The casino will remain open- we can't impede the ability of corporations to bid up prices for the American consumer by speculation and other gambling in the derivatives market. While the goal is to rescind Dodd-Frank, the strategy aims to undermine the legislation because (not despite) "Unnecessary delay in implementing the Dodd-Frank Act will increase risk to the American people and leave significant uncertainty in the marketplace.”

House Majority Leader Eric Cantor admits, with no hint of shame,that he leans on counsel from the CME Group, which describes itself, with no shame but only pride, "As the world’s leading and most diverse derivatives marketplace."

While the CME Group specializes in trading contracts and derivatives products related to oil and food, Cantor was fourth in his chamber in campaign contributions from the securities and investment industry during the last election cycle. Number 10 was Spencer Bacchus, a Republican from Alabama. Once elected, the incoming chairman of the Financial Services Committee informed us

In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.

And so is Bacchus' party. Talking Points Memo reported earlier this month:

Forty four of their 47 members have signed on to a letter threatening to filibuster any nominee to head the new Consumer Financial Protection Bureau unless it is dramatically weakened.

"We will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed," reads a letter, co-authored by Senate Minority Leader Mitch McConnell and Sen. Richard Shelby (R-AL), ranking member of the Banking Committee.

Congress created the CFPB, despite GOP opposition, as part of the Wall Street reform law, to protect consumers from predatory actors in the financial industry.

Shelby was #24 in contributions from the securities and investment industry and McConnell, #21 , despite hailing from states in which media buys are relatively inexpensive.

All is not lost. The presumptive- though far from inevitable- nominee for the Bureau is the extraordinary Elizabeth Warren and House Democrats are distributing a letter urging President Obama to tap her for a recess appointment. If Obama follows their advice, a major blow will have been struck for consumers. It would not be sufficient for reversing the three decades-long trend toward deregulation of the financial industry, but it is necessary.

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Oil Rhetoric


Mitt Romney has been campaigning in New Hampshire. According to Reuters, he "said he believed Obama was contributing to oil price pressures by not pursuing an energy policy aimed at drilling more and increasing America's supply." U.S. Representative James Lankford (R-OK) claimed "Americans are looking for leadership to tackle the rising gas prices, but President Obama has only offered a tax increase on energy and the prospect of reduced supply. For more than two years, his administration has knowingly increased energy prices by choking off new sources of traditional American energy and smothering our economy in new energy regulations."

But as usual, no one can outdo the former governor of Alaska. On her Facebook page on Tuesday, Sarah Palin charged

Taken altogether, it’s hard to deny that the Obama Administration is anti-drilling. The President may try to suggest that the rise in oil prices has nothing to do with him, but the American people won’t be fooled.

If Mrs. Palin read any newspapers, she might have learned

More than two-thirds of offshore leases in the Gulf of Mexico are sitting idle, neither producing oil and gas, nor being actively explored by the companies who hold the leases, according to a Department of Interior report released Tuesday.

Those inactive swaths of the Gulf could potentially hold more than 11 billion barrels of oil and 50 trillion cubic feet of natural gas, Interior said in the report obtained by The Associated Press.

President Barack Obama ordered the report earlier this month amid pressure to curb a spike in gasoline prices following instability in the oil-rich Middle East. The White House said Obama would outline his plans for America’s energy security in a speech in Washington today.

The inefficiencies detailed in the Interior Department report also extend to onshore oil and gas leases on federal lands, with 45 percent of those leases deemed inactive. The department said it is currently exploring options to provide companies with additional incentives for more rapid development of oil and gas resources from existing and future leases.

Or she might have learned of the ten deep water drilling permits approved by the Interior Department's Bureau of Ocean Energy Management from February 28 through April 8 of this year.

Still, the Obama Administration, in Palin's imagination, must be "anti-drilling." The permits were granted by the socialist-in-chief even though

The blowout preventer that should have stopped the BP oil spill cold failed because of faulty design and a bent piece of pipe, a testing firm hired by the government said Wednesday in a report that appears to shift some blame for the disaster away from the oil giant and toward those who built and maintained the 300-ton safety device.

At least one outside expert said the findings cast serious doubt on the reliability of all the other blowout preventers used by the drilling industry.

The failure of the piece of equipment intended to prevent tragedies like the Deepwater Horizon spill was no fluke; it's how it was designed. And still permits are issued, while domestic oil production has held steady and net imports have declined since Obama became president.

What is not steady is Sarah Palin.

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As We Drill, Baby, Drill


A year ago yesterday, 205 million gallons of oil and 225,000 tons of methane were released into the Gulf of Mexico, and eleven men died, following an explosion on the Deepwater Horizon rig off the coast of Louisiana. Though the greatest fears of the impact have not been realized, according to The Associated Press

biologists are concerned about the spill's long-term effect on marine life.

"There are these cascading effects," D'Elia said. "It could be accumulation of toxins in the food chain, or changes in the food web. Some species might dominate."

Meanwhile, accumulated oil is believed to lie on the bottom of the Gulf, and it still shows up as a thick, gooey black crust along miles of Louisiana's marshy shoreline. Scientists have begun to notice that the land in many places is eroding.

And the Center for Biological Diversity concludes

The price paid by wildlife in the Gulf for the BP oil spill will continue to rise. Although it is the largest to date, the Gulf oil spill was simply the latest in a string of ongoing and inevitable spills produced in the Gulf. More than 320 known spills involving offshore drilling have occurred there since 1964. Spills massively degrade ecosystems and all of the wildlife dependent on those ecosystems in the Gulf. Clean-up efforts only remove a fraction of the persistent oil and gas spilled. The remainder of the oil, including millions of gallons remaining in the Gulf, will continue to poison wildlife for generations. Besides the direct harm to wildlife, the spill impoverishes the people of the Gulf and the nation, who depend on this rich body of water for food, culture, environmental enrichment and recreation.

The Chairman of the House Oversight and Government Reform Committee, Republican Darrell Issa of California, notes in his report issued two days ago noting the harm to the victims of the region, the seafood industry, and the area's diverse habitats and ecosystems. But Issa, who demonstrated fealty to corporate America shortly before he became chairman, used the occasion primarily to blast President Obama, charging

the real and harsh effects the Administration’s subsequent assault on off-shore drilling has had on economically vulnerable communities. This retreat from efforts to achieve energy independence from foreign oil isn’t appreciated by Gulf communities whose local economies depend on off-shore oil production or millions of Americans who find themselves paying $4 gallon for gasoline. The legacy of this spill should be an increased emphasis on safety, not a full-scale retreat from off-shore energy production.

But in the past two months U.S. regulators have granted ten deepwater drilling permits despite the failure of the petroleum industry to rectify the problems which led to the blowup on the Transocean-owned rig. On March 24, Rachel Maddow found (transcript here; video below)

The blowout preventer is basically a piece of equipment that`s attached to the top of an oil well, right? And when pressure surges up the drilling well -- drilling pipe the blowout preventer is supposed to kick into action. It essentially seals up the well and holds all of that pressure in.

If the blowout preventer does not work, you get this. You get disaster -- disaster not just for the environment but for the crew that`s stationed on top of that malfunctioning oil rig. Eleven crew members were killed when the Deepwater Horizon oil rig blew in the Gulf of Mexico last April.

Soon after that explosion and the historic oil spill that followed, it was pretty obvious that the blowout preventer had failed to prevent that blowout. That was pretty clear. But what we know now, what we have learned this week in fact is that the blowout preventer in question was not built wrong, it wasn`t broken, and it was used as directed.

The Coast Guard hired a Norwegian firm to do an expert forensic analysis of what went wrong with that blowout preventer in the BP disaster. The Coast Guard, I should say, oversaw this. The government hired this firm.

The firm set up shop at a NASA facility in New Orleans in mid- November. Yesterday, they release what`d they found -- what they found is that in our metaphor from earlier, the air bags in this case, and maybe in every case, don`t work. More specifically, they found air bags work unless there`s a car crash, and then they don`t work.

The forensic analysis of what went wrong in the BP disaster found a big burst of pressure that causes a well blowout can also render the blowout preventer useless. If the shock that causes the initial accident misaligns the rig`s pipes and valves, the blowout preventer won`t be able to work, won`t be able to seal off the pipe, even when used as directed, even when you do everything right.

Noting that the blowout, the disaster which causes the need for the blowout perventer, blows out the blowout preventer itself, Maddow explained

fears right now about possible nuclear meltdown in Japan is because the backup plan there failed, right? An earthquake and tsunami knocked out the power at the reactor. You need that power at all times to cool the radioactive fuel rods. But don`t worry, there`s a backup power source. A backup power source that was also knocked out by the same quake and tsunami that knocked out the first-line power source. The same disaster that caused the need for the backup plan also killed the backup plan.

Used as designed, cigarettes cause cancer and other diseases. The blowout preventer can fail when operated as designed and is effective except when needed. Maddow's guest, former industry oil executive Bob Cavnar, maintains that the new regulations put into effect by the Department of Interior

are primarily around safety training and in third-party certification that supposedly assures the government that the companies who normally self-regulate are actually doing what they say they`re doing.

There`s real no -- no real change to deepwater drilling. The only real kind of systematic change is this subsea well containment procedure that they`ve developed, that a company has to certify that they are a part of before they receive a drilling permit....

There`s no fundamental change to the way we drill the deepwater, Rachel. We`re doing it with the same equipment, the same blowout preventers on all the deepwater rigs that are in the Gulf that failed on the Macondo well. And the issue here is that these new regulations regulate an unreliable piece of equipment, and regulating something that`s unreliable doesn`t make it more reliable. It just makes it more regulated.

Senate Democrats have proposed measures to increase our supply of oil, safely. That is not likely to impress Darrell Issa, who has cozied up to the petroleum industry. Not coincidentally, the push for a rational energy policy in light of the explosion in the Gulf seems to be as elusive as the effort to rein in the excesses of Wall Street after the financial catastrophe it was primarily responsible for.

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Speculation

There is a bright side to almost everything, even recession.

Demand for energy, especially for oil, generally drops during an economic downturn and this one has been no exception. David R. Baker of the San Francisco Chronicle reported on May 24 that Americans used 2.7 per cent less gasoline in the previous four weeks than in the corresponding period in 2008. Prices for a barrel of oil sold on the New York Mercantile Exchange briefly dropped to below $34 in December and January and demand, reported McClatchy newspapers on May 23, has fallen to a 10-year low while inventories are at their highest levels in almost twenty years.

And yet.... as of May 20, crude oil prices had risen more than 70 per cent since mid- January with the average price of regular gasoline at the pump costing $2.33, 28 cents a gallon more than a month earlier. And in the past eleven days, they've gone higher. The oil companies are doing their share at keeping prices up, operating refineries at below 85 per cent of capacity while "an estimated 100 million barrels worldwide are sitting in tanker ships, which companies have been using as floating storage bins." But oil companies are not the major culprits, as McClatchy explained:

This time, Wall Street speculators — some of them recipients of billions of dollars in taxpayers’ bailout money — may be to blame.

Big Wall Street banks such as Goldman Sachs & Co., Morgan Stanley and others are able to sidestep the regulations that limit investments in commodities such as oil, and they’re investing on behalf of pension funds, endowments, hedge funds and other big institutional investors, in part as a hedge against rising inflation.

These investors now far outnumber big fuel consumers such as airlines and trucking companies, which try to protect themselves against price swings. The big investors are betting that the economy eventually will rebound, that the Obama administration’s spending policies and Federal Reserve actions will trigger inflation and that oil prices will rise.

“They’re buying because they think it will diversify their portfolio, and they think it will diversify their portfolio against inflation, and maybe they think the economy will turn around,” said Michael Masters, a hedge-fund manager who testified before Congress last year about the consequences of what are called exchange-traded funds.

Oil contracts are traded mostly in U.S. dollars, and inflation would erode the value of oil earnings, stocks or any other asset denominated in U.S. currency. Many investors are pouring money into oil futures — contracts for future deliveries of oil at specified prices — in the belief that oil prices will rise as inflation erodes the dollar’s value.

This has not gone unnoticed in the halls of Congress. Noting the impact of speculation on energy prices, Representative Bart Stupak (D.-Mich.) observes

We are in the middle of a recession, supply is at a 20-year-high, demand is at a 10-year low, yet oil prices are up 70 percent since the beginning of the year. This cannot be explained by simple supply and demand.

And so he has inserted into the climate bill wending its way through Congress

provisions that would ban some types of oil trades and regulate others that don't take place on a formal market. Limits on the number of oil contracts a speculator can hold would be extended to cover those trades as well as trading on electronic exchanges and overseas markets.

We now are six days beyond the observance of Memorial Day and one day beyond the traditional Memorial Day and have given thanks for the freedom in this land and the sacrifices which have helped safeguard it. Let us be thankful also that there are a few legislators who recognize our need to be protected from the greed and machinations of corporations which have fed at the trough of the American taxpayer and are only too willing to fuel an inflationary spiral they're betting on.

Oil Prices

The Washington Post reports:

Car ownership in China is exploding (and) China's demand for gas is much of the reason for the dramatic run-up in global oil prices.

China alone accounts for about 40 percent of the world's recent increase in demand for oil, burning through twice as much now as it did a decade ago. Fifteen years ago, there were almost no private cars in the country. By the end of last year, the number had reached 15.2 million.

The New York Times reports:

Bolstered by speedy economic development and industrialization, energy demand from Asia has been one of the main contributors to higher oil prices. Over the last two years, China and India accounted for about 70 percent of the increase in energy demand and the world’s energy needs would increase 55 percent by 2030.

And so we were informed on July 28, 2008 (by WaPo) and on November 7, 2007 (NYT) that the soaring rise in demand for energy in the Asian behemoths played a major role in rising gas prices.

After the latter report, as we all know, gasoline prices in the U.S.A. plunged.

We shouldn't have been surprised. Whatever the cause(s) of the runup last year in gasoline prices, it's hardly likely that the mainland Chinese and the Indians accomodated us in the second half of 2008 by drasticaly cutting their demand so we could buy $1.69 a gallon gas in Dearborn, Michigan or Las Vegas, Nevada.

Fortunately, we are not hearing the same wildly exaggerated and misleading claim for the rise in gas prices now going on nationwide- while the price of crude oil continues to tank (pun intended). Chris Kahn and John Porretto of the Associated Press explain:

The benchmark for crude oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning paper.

Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.

But it is the overseas crude that goes into most of the gas made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.

Those of us who like paying under $2.00 a gallon might ask: why not buy the better, cheaper oil?

The AP writers continue:

Historically, West Texas International crude has cost more. So nobody bothered building the necessary pipelines to carry it beyond the nearby refineries in the Midwest, parts of Texas, and a handful of other places.

And nobody (e.g., consultant, economist) at a major oil company could figure out that at some point the cost of oil from such places as the North Sea, Saudi Arabia, and South America would eclipse that from west Texas? No one thought that oil supplies to Americans would rise and prices decline if pipelines were constructed to transport the crude to the refineries and to market?

Attribute it to incompetence or to greed of the oil companies. Better yet, given the state of American capitalism (conveniently transformed into corporate socialism) call it just another example of the inefficiency of the free market.

Political Malpractice

Rachel Maddow of Air America and MSNBC has it right: "political malpractice." In a week in which the major economic news arguably is the report of record profits of Exxon-Mobil, Barack Obama should pound on the profits obscenely made by oil companies at the expense of the American consumer. Instead, the Illinois Senator, perhaps fearful of the kind of 527 attack that helped inspire his cowardly vote in favor of the 2008 FISA Amendments Act, chose this week to state

If, in order to get that passed (i.e., "comprehensive energy policy"), we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage- I don't want to be so rigid that we can't get something done.

Some will call that pragmatic, realistic, a move to the center. But once the Repub hit machine gets hold of it, it will be seen as classic liberal "nuance"- weak, vacillating, and timid. In fact, instead of praising Obama's moderation and reasonableness, John McCain pounced, responding "We need oil drilling and we need it now offshore. He has consistently opposed it. He has opposed nuclear power. He has opposed reprocessing. He has opposed storage."

The American people are looking for a strong, aggressive response to the energy issue. John McCain, thoughtlessly and in apparent ignorance of the facts, has provided it; Barack Obama, ever reflective and striving to transcend traditional political arguments, has not. And he has failed despite having the perfect opportunity this past week to demonstrate that he is on the side of the American consumer against powerful economic interests.

Quote Of The Week

"Perhaps the only thing more outrageous than Exxon Mobil making record profits while Americans are paying record prices at the pump is the fact that Sen. McCain has proposed giving them an additional $1.2 billion tax break."

-presumptive Democratic presidential nominee Barack Obama on July 31, 2008

High Prices, Big Profits

Today, July 31, 2008, Exxon-Mobil announced second quarter earnings of $11.8 billion, the largest quarterly earnings posted by any corporation in world history. (Royal Dutch Shell announced a profit of $11.7 billion.) The previous record was held by.... Exxon-Mobil. Their profit margin: 10.85%.

In response, Democratic Senators Charles Schumer of New York and Robert Menendez of New Jersey were joined by Democratic U.S. Representatives Edward Markey of Massachusetts and Rahm Emanuel of Illinois at a press conference to blast the profits of Big Oil while Americans are paying record prices at the pump. The hill.com reports

Democrats criticized Exxon Mobil for spending $89.5 billion in stock buybacks over 2005-2007, and just $2.9 billion in research and development during the same time. They sent a letter Thursday calling on the oil company executives to invest their profits in alternative sources of energy.

Still, Republicans will repeat their mantra: "drill, drill, drill." It would be too generous to suggest that they are innocently being held up and played for suckers by "the most selfish group of companies that I've ever seen," as Schumer described them. No, they are fully aware that their policies have one motive: fatten the profits of the oil industry.

It's Big Oil- no. 3

The majority staff of the United States House Committee on Natural Resources, chaired by Nick Rahall (D.-W. Va.), issued in June, 2008 a report entitled "The Truth About America's Energy: Big Oil Stockpiles Supplies and Pockets Profits." Here is a summary of the committee's summary:

The federal government has dramatically increased drilling permits for oil and gas development on public lands since 1999. But many permits haven't been used, leaving nearly 10,000 permits stockpiled by oil and gas companies. If there were drilling on the 68 million acres of land currently currently under lease but not in production, U.S. oil production would nearly double and natural gas production increase by 75%, thereby cutting our importation of oil by one-third.

Oil is demand-inelastic; as its price increases, demand drops only minimally because it's an essential good. As the price of oil rises, demand for gasoline at the pump drops less than the price has increased, increasing profits of the industry. Can we escape the conclusion that oilmen may be holding down supply until the price increases drastically? And, with the President and the Vice-President of Big Oil running Washington, will the Democratic Congress acquiesce or fight back? And will its presumptive presidential nominee find his voice?

Sean Hannity, Making No Sense

Syndicated talk show host and GOP TV talk host Sean Hannity interviewed on radio former U.S.Representative J.C. Watts (R.- OK), a conservative black who served in the House after he wisely chose not even to attempt an NFL career as a quarterback. Sean clearly was surprised that Watts was considering voting for Barack Obama in November (apparently for racial reasons), and ticked off the (conservative) positions on which he believed they agreed. One of these was "we want to secure the borders for safety reasons, not for any other reasons." If this is in fact Hannity's only reason for a strict anti-illegal immigration policy, given that we know that our northern border is less scrutinized than our southern border, can a proposal by Sean Hannity for securing the U.S.A.-Canadian border be far behind?

Sean never misses a chance to assure us that domestic oil companies are selflessly pursuing increased supplies of oil to serve the American consumer with little interest in their own profit. Thus, during his interview with Watts he breathlessly asserted to his audience "fifteen percent of what we pay at the pump is taxes, it's unbelievable."

When George W. Bush assumed office in January, 2001, the nationwide price of a gallon of unleaded gasoline was approximately $1.43. Now it is approximately $4.00, a rise of approximately 280%. Subtract that 10% for taxes, and it still is $3.60 (and taxes were included in that 1/01 price of $1.43). Yes, Sean, the price at the pump and the pain caused the American consumer must be government's fault. Here is something Hannity would find really unbelievable if he did a little research: As of October, 2005, when the maximum gasoline tax rate in the United States was 17%, in France taxes composed approximately 70% of the purchase price. In April, 2006, when the U.S.A. had roughly a 15% tax on gasoline, the Netherlands had a 158% tax on gas. The U.S. had the lowest tax on gasoline of any industrialized country; compared to similar countries, governments in the U.S. take less; the oil companies take more. An inconvenient truth for conservatives and Republicans, but a truth nevertheless.

Suspension of Gas Tax?

In an editorial today, May 1, 2008, the New York Times has blasted the call by Senators McCain and Clinton for a gas-tax holiday as "an expensive and environmentally unsound policy that would do nothing to help American drivers."

The Times should be lauded for noting "turning a tax off in May and on in September would be an administrative nightmare," a point I haven't heard, or read, elsewhere. Similarly, The Times correctly asserts "if a suspension in the excise tax reduced the price at the pump, it would encourage even more driving. This would simply push prices back up. Oil companies would be grateful, drivers less so."

Of course, if more driving would be encouraged, it would not be the "expensive" policy the Times cites because it still would bring in significant revenues from the gas tax- even more if it "would simply push prices back up."

The bigger problem with the Times eleven-paragraph editorial is its failure to represent accurately Mrs. Clinton's position on the gas tax. The Times itself, on its news side, had reported on Tuesday, April 29:

Mrs. Clinton said at a rally on Monday morning in Graham, N.C., that she would introduce legislation to impose a windfall-profits tax on oil companies and use the revenue to suspend the gasoline tax temporarily.

“At the heart of my approach is a simple belief,” Mrs. Clinton said. “Middle-class families are paying too much and oil companies aren’t paying their fair share to help us solve the problems at the pump.”

The Times charged "Senators John McCain and Hillary Rodham Clinton have hit on a new way to pander to American voters." Failure to mention Senator Clinton's support for a windfall profits tax on oil companies- apparently as a condition for suspending the gasoline tax- is so negligent as to make it appear an effort to distort Clinton's position, to make it appear as unwise as McCain's position. Times Op-Ed columnist Paul Krugman a day earlier had explained "the Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil."

Suspension of the gas tax, with its administrative confusion and cost, is probably not a wise choice, even with a windfall profits tax, which would eliminate or reduce the budgetary expense. But The New York Times, Senator Obama, and other critics must consider the regressive nature of the gasoline tax and continually escalating cost of energy in destroying the hopes of poor and middle-class Americans in a deteriorating economy.