Monday, August 4, 2008

Is Carl Levin a Demagogue on Domestic Oil Production?

dem·a·gogue \ˈde-mə-ˌgäg \ noun.  A leader who makes use of popular prejudices and false claims and promises in order to gain power.
As the issue of whether or not to drill for domestic oil has been debated in Congress, I have done a little research on where Carl Levin has historically stood on the issue. His rhetoric is consistent; he does not want us to explore for or produce oil from domestic sources. Here is a summary of things he himself has said in the recent past about the issue:

  • High Oil prices are due to the "failed policies of George Bush" and speculators.

His four-point plan to solve the probem of high prices and short supply:

  1. We need more "cops on the beat" to police speculation (read MORE regulation)

  2. We need to stop filling the strategic oil reserve

  3. We need to develop alternative energy sources like wind and solar

  4. We need to impose a windfall profits tax on the (evil) oil companies

Carl Levin "hailed the Senate vote to oppose drilling in the Alaska National Wildlife Refuge." He says that producing in ANWR would not create thousands of jobs, that ANWR contains less than six months supply of oil, that we should not "alter our pristine wilderness" (ANWR), and we should develop corn and soybeans for cleaner fuel. His latest salvo is that the oil companies already have millions of acres in the gulf under lease where they are not drilling and until they do, he will not vote for expansion of drilling off shore.
Much of Mr. Levin's rhetoric carries an undercurrent of suspicion that "Big Oil" and corporations are bad, that they are only interested in profit, and that they are dishonestly ripping off the public and lining the pockets of their executives and shareholders.

A Little Truthful Perspective, Please

There is no question that many corporations are corrupt. Certainly, some large businesses have lost their perspective on the importance of providing good jobs at a fair wage and sharing the profits with their employees. But companies like this are the exception rather than the rule. What irritates me is that Mr. Levin doesn't ever seem to suggest that government can be corrupt, also...not to mention wasteful, inefficient, bloated, fraudulent and woefully mismanaged.
Let's debunk some of Mr. Levin's assertions about why we have high oil prices:

  • "Failed Bush policy on energy." Did you know that the Bush Administration put out a very comprehensive energy plan back in 2001? It included policies regarding helping the poor get insulation and heating assistance, conservation, alternative energy, protection of the environment, energy independence, improved delivery, and strengthening energy security and international relationships. That is not a failed policy.

  • "Speculation on the market."  Speculation is nothing more than a willing buyer and a willing seller on the future price of a commodity. Thanks to speculation on the oil market by the airline industry, they are paying less for fuel than they otherwise would have. Speculation is not bad for the market, in fact it is healthy and has been going on for a long time. The Heritage Foundation has put out a very good essay on the positives of "speculation." Bottom line, it is not a major (let alone minor) cause of high oil prices.

  • "We need to stop filling the Strategic Petroleum Reserve." While this may have been a small factor in the past, today it has very little to do with the price of oil. A little reading from the Department of Energy website and the SPR data page shows that there is a strategic need for a reserve and that the reserve is almost full. The rate it is being filled at now is about 2 million barrels per month; according to the latest Energy Information Agency data, we are using about 600 million barrels per month. One-third of one percent is being banked, not exactly enough to cause a steep rise in prices.

  • "We need to develop alternative supplies." OK, I will go along with that one, but better to provide incentives and free market solutions than mandates, more taxes and regulation to force it to happen.

  • "Place a windfall profits tax" on (evil) big oil. This is probably the worst solution of all. We tried this in the 1970's; it did not work. Read a little history about this bad idea. Here is an additional story that debunks the rhetoric about rasing taxes on oil companies.  

With regard to the Alaska National Wildlife Refuge (ANWR), the rhetoric is totally out of control. The size of the parcel where the exploration would be done is infinitesimally small and is located in the middle of a flat frozen tundra. Furthermore, the advances that have been made in exploration and extraction have made despoiling of the environment virtually non-existent. Read more here. While this web site is put out by proponents of drilling in ANWR, the information is factual and helpful.
In summary, high oil prices are caused by tight supply and growing demand, mostly from China and India. Domestic oil exploration and production is essential to national security and the future stability of oil prices. Senator Levin will not acknowledge any of these facts but instead blames Bush, big oil and the commodities market. He would prefer rather than develop domestic production, we continue to depend on foreign sources for oil and send hundreds of BILLIONS to foreign countries. He sounds like a demagogue to me.

My Solemn Pledge

My promise to you is that as your U.S. Senator, I will make decisions and vote based on sound science and what is best for the country. In the case of energy independence, I will support the United States using its own sources first while encouraging free market solutions to alternative energy needs. We can drill safely for oil and natural gas right here, right now. In the long run it will lead to lower prices, market stability, and energy security.

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