Flickr photo / Lone Primate
We’re really in a fix. Gas prices are rising precipitously, with no end in sight. As of this writing, gas was at $146 a barrel – more than 104 percent higher than a year ago.
As a result, fuel costs are causing a ripple effect throughout the economy because virtually everything we buy is made from petroleum or transported by a vehicle that uses oil. Too many families are making hard choices about whether to put gas in the car or food on the table.
So far, Congress has done nothing to help the average consumer. The U.S. House of Representatives has passed some key bills, but they haven’t gotten through the Senate, where Democrats have just a narrow, one-vote majority.
Lawmakers have held half a dozen hearings on oil and gas prices, but no legislation has passed. President Bush has been an impediment; he has threatened to veto any legislation that would roll back oil company subsidies or impose a windfall profits tax on oil companies.
We are at a turning point, and the federal government must act. But we must do the right thing. Choosing the wrong course will spell disaster.
This is the biggest decision the U.S. has had to make on energy policy in more than 50 years. When I was a child and we took family vacations, I saw signs along the highway promoting nuclear power.
At the time, it was new – a product of World War II. A push was on to find a peaceful use for it, but the federal government was debating whether to invest in nuclear or solar power. Congress pondered legislation to dedicate money to solar power and opted to support nuclear power instead. Now, we are dealing with the problems of nuclear power, which is so expensive that it can’t exist without massive taxpayer subsidies and creates deadly waste that is radioactive for 250,000 years.
Today, we are at a similar crossroads.
A solution exists, though. Public Citizen has drafted a five-point plan to help lead us to energy independence. We must:
* Repeal tens of billions of dollars in tax breaks to oil, gas and coal companies to finance clean energy, energy efficiency and mass transit.
Apologists for oil company profits argue that the companies need and deserve these record-breaking windfalls to provide incentives for them to invest more money into increased energy production.
But since January 2005, the top five oil companies have spent $170 billion of their profits to buy back their own stock. And they’ve held back $70 billion in cash. That’s money you paid at the gas pump.
By canceling the current tax breaks, we could fund alternative energy sources and subsidize efforts by American families to reduce their energy consumption.
* Re-regulate energy trading exchanges, stop energy traders from speculating on inside information and close the revolving door between federal regulators and the energy industry.
Oil companies, investment banks and hedge funds are exploiting the lack of government regulation to gouge consumers and increase profits. They even boast about it.
A Wall Street Journal article reported that energy “traders who profited enormously on the supply crunch following Hurricane Katrina cashed out of the market” making, as one trader noted, “so much money this week that they won’t have to punch another ticket for the rest of the year.” And they’re at it again.
* Ensure that the Federal Trade Commission cracks down on anti-competitive practices by oil companies and financial investment firms.
A tidal wave of recent mergers between giant oil companies has changed the landscape for energy competition.
Today, so few companies control so much of America’s access to oil refining and retail sales that real competition barely exists. As a result, you and other consumers are paying more at the pump than you would if the market was more competitive.
* Establish a Strategic Refining Reserve to be financed by a windfall profits tax. This would complement America’s Strategic Petroleum Reserve.
Not only did oil companies merge to shut out competition, but they systematically tightened the refining market to further increase profits. From 1995 to 2005, roughly 929,000 barrels a day of refining capacity was shut down, 97 percent of it owned by small, independent retailers. So, despite predictions of increased fuel consumption, no new refining capacity is in the works.
Since the profit for refining crude oil in the U.S. is about double the margin in other countries, there’s no financial incentive for building new refineries. Once again, we need more competition and more supply to lower prices at the pump.
* Improve fuel economy standards from the modest increase approved last year by Congress.
We must convince our nation’s leaders to get tough about fuel economy and force automakers to use the technology that now exists to make cars and trucks go farther on a gallon of gas.
We can’t fix the economy without solving the energy crisis. We can’t protect our nation’s financial security with record-breaking energy costs driving up the price of everything.
We can’t stop global warming if America continues to consume one of every four barrels of oil used by the entire world.
And we can’t clean up Washington if we continue to allow loopholes, subsidies and tax breaks for oil profiteers.
Public Citizen is providing this plan to Congress and the presidential candidates. But we need your help. Please stand with us against Big Oil. Call the Capitol switchboard today at 202-224-3121 and ask to speak to your senator and representatives.
Nothing less than our future is at stake.