Pro vs Con

Oil companies can build refineries now if they want. But they don’t, because they make more money when they dictate supply and keep prices high.

As the Natural Resources Defense Council explains: "Although refinery capacity is a factor in today's higher gasoline prices, environmental regulations are not the reason for tight refinery capacity, according to the DOE, the Environmental Protection Agency, the General Accounting Office, and even oil industry executives. Consider the market fundamentals: refiners reap higher profits when capacity is tight, so they actually have a disincentive to significantly expand production. In fact, oil executives have stated that the reason they did not expand refining capacity in the 1990s is that the low profitability of the business did not justify the investment."

A number of progressive solutions were offered in Congress that would have made more meaningful contributions to solving our energy crisis than the "drill here, drill now" sloganeering from the right. But it's been the conservatives in Congress who have been blocking consideration of common-sense solutions that would have brought immediate as well as long-term relief to consumers. For example, conservatives in Congress have blocked:

• Tapping the Strategic Petroleum Reserve, which now holds over 700 million barrels of oil. Releasing a small fraction of the Reserve—which was done in 1991, 2000, and 2005—would immediately lower gas prices as it has in the past. But conservatives in Congress have voted against this modest measure.
• A ban on gasoline price-gouging, which would make it unlawful to artificially inflate gas prices to take excessive profits. Conservatives in Congress voted against an anti-price gouging bill.
• A crackdown on oil price speculators, the hedge funds and investment bankers who have used loopholes in commodities law to manipulate the futures market and drive the price of crude oil to record levels. Conservatives oppose legislation to stop excessive speculation.
• Helping hard-pressed Americans with a tax break paid for by a windfall-profits tax on Big Oil. The big oil companies are reaping undeserved profits that should be taxed and rebated to American families, but conservatives in the Senate blocked a windfall profits tax in June.

Conservatives are good at grandstanding, but they can't escape blame for the lack of real progress on energy.

Equating laws that protect the environment and encourage a shift away from fossil fuels with the brutal segregation laws of the old South is offensive beyond belief. Yes, people of color are hit disproportionately hard by high gas prices, but they have also been hit disproportionately hard by decades of carbon-based pollution in cities, and will bear the brunt of adverse effects on the climate if America's energy consumption patterns don't change. What would really transform the lives of people of color now living in poor communities is massive investment in a green-collar economy, which would produce millions of jobs in urban areas that would not be created through more oil drilling, and would prevent worsening global warming. Besides, a new federal report says that if we opened up the Alaska National Wildlife Reserve to oil drilling today, we wouldn't start getting the gasoline in our tanks until 2018, and it would reduce the price of oil (now over $130 a barrel) by, at the most, $1.40 a barrel — in 2025. We can't wait that long, and through conservation and by deploying existing green technologies and researching new ones, we don't have to.

Bush greatly misstates the Energy Department's conclusion. The AP reported in 2004: "Opening an Alaska wildlife refuge to oil development would only slightly reduce America’s dependence on imports and would lower oil prices by less than 50 cents a barrel, according to an analysis released Tuesday by the Energy Department ... if Congress gave the go-ahead to pump oil from Alaska’s Arctic National Wildlife Refuge, the crude could begin flowing by 2013 and reach a peak of 876,000 barrels a day by 2025. But even at peak production ... the United States would still have to import two-thirds of its oil..."

During the Bush presidency, crude oil prices have risen from about $30 a barrel to $117. Shaving off 50 cents per barrel, more than a decade from now, is meaningless as far as price at the pump.

What the House actually did was vote to repeal tax breaks worth $18 billion that the oil companies received from the Republicans in 2004. The need for the tax breaks was highly questionable then, when these companies were profiting hugely from oil that had not yet reached $50 a barrel. Now that oil is above $100 a barrel, there's clearly no justification for those breaks. For example, Common Cause notes that just one company, ExxonMobil, spent more of its profits in 2007 buying back its own stock ($31.8 billion) than on its entire exploration and drilling operation ($20.9 billion). The top five oil companies are already sitting on $53 billion in cash that they can use if they want to discover and bring more oil to market. By restoring the tax code for oil companies to essentially when it was before oil lobbyists, armed with campaign cash, got their friends on the Republican-controlled Congress to change it , the federal government can put the subsidies where they are truly needed—into research and seed money for renewable technologies that promise domestic, green-collar jobs and a pollution-free environment. And no, Mr. President, ending a giveaway that never should have happened is not a "tax increase."

The economic impact of global warming may shrink the world economy by a devastating 20 percent. Investing in a clean energy economy will create more than 3 million jobs in America, and will allow the world economy to keep growing.

Big Oil has never competed in a free market. It’s propped up with our tax dollars. Instead, we can invest in jump starting a clean energy economy, so renewable energy can compete and thrive on a level playing field.

Burning fossil fuels is leading us to the brink of a climate crisis. We have the technology today to put us on a new path towards a clean energy economy. Let’s stop propping up Big Oil and start investing in our future.