DALLAS (May 11, 2007) – As gas prices passed the $3.00 a gallon mark, several members of Congress have taken aim once again at the oil companies, promoting everything from a windfall profits tax to breaking the oil companies up. Yet rather than attacking "big oil," Congress should look in the mirror, according to H. Sterling Burnett, senior fellow with the National Center for Policy Analysis (NCPA).
"The rhetoric coming from Congress shows a naiveté about energy markets and a blatant disregard for their own role in causing high prices," says Burnett.
Burnett points out that energy prices are subject to the basic economic laws of supply and demand, and Congress continually restricts supply:
- Congress chose not to lift the moratorium on new oil and gas production on the U.S. Outer Continental Shelf, putting more than 85 billion barrels of oil (quadruple current U.S. reserves) off limits.
- Congress has repeatedly refused to allow oil development in the coastal plains of ANWR, putting 16 billion barrels of oil off limits.
- Congress dictates the types of gasoline that Americans burn, mandating 57 different gas blends that must be refined with seasonal changeovers.
"Essentially, by limiting domestic supply opportunities, Congress has required that oil companies, and therefore pump prices, are reliant on oil from foreign countries sold on the world market, rather than their own domestic reserves," says Burnett.