March Madness: Heller’s Repackaging of Old Oil Ideas

Got Gas? Anointed Senator Dean Heller (R-NV) has an idea to lower gas prices…which he will attach to some bill…which may or may not address the global market forces or the pure speculation built into the oil market.  He describes it thusly, with commentary points  inserted:

(1) “Raising taxes and extending failed stimulus programs will do nothing to lower gas prices.  (2) I support closing tax loopholes and reforming the tax code, but most Americans would agree that simply raising taxes will not lower gas prices.  (3) Unlike some in Washington, I believe lower gas prices are a good thing for the American people, and that is what Congress should be working toward.

(4) “My amendment is a commonsense compromise that closes tax loopholes, provides tax relief for every American that drives a car, and allows for the responsible development of our nation’s natural resources to increase supply.  Instead of partisan gridlock, both sides should be working together to find solutions that deliver results for the American people,” said Senator Dean Heller.”  [Heller]

Note to Senator Heller about point number one, only on Planet Norquist does closing off a subsidy for major oil companies count as a “tax increase.”  Yes, the oil giants would have to pay more of their own expenses, but the taxes themselves don’t increase — it’s the taxpayer funded subsidy for major oil firms that gets whacked.  Secondly, Republicans announced that “The Stimulus Failed” even before the ARRA was implemented.  This talking point has moved beyond mere repetition and into the Land of Mantra.  And, how do we know that the ARRA (Stimulus Bill) did some good?  The Wall Street Journal told us: Government efforts to funnel hundreds of billions of dollars into the U.S. economy appear to be helping the U.S. climb out of the worst recession in decades.” (9/2/09)

As to point number two, who said raising taxes would reduce gas prices? Simply inserting a straw man contention doesn’t necessarily improve the argument.  The original bill, S. 2204, isn’t about gas prices — it’s about the questionable use of tax credits and gimmicks which are of benefit to an industry that is highly profitable without government subsidies, and the repeal thereof.   When an American family can end up paying a 28% tax bill while Exxon-Mobil is paying 13.5% something’s amiss.

Senator Heller, as mentioned yesterday, is “all for closing tax loopholes,” IF the plan is part of His Big Picture — which if he follows the Americans for Tax Reform’s lead means enacting the inane Balanced Budget Amendment and the equally improbably Flat Tax that shifts the major tax burden from the exceedingly wealthy to the exceedingly hard working.

Point Three is yet another Straw Man.  The radical right has adopted a line about the Obama Administration and the Secretary of Energy not “concerned about gas prices.”  Some strategic re-interpretations of the Administration’s policy on the development of alternative sources of energy can’t be clipped and re-stated to make it look as though Secretary Chu isn’t primarily concerned about gasoline prices, but it’s a real stretch.  This won’t prevent presidential candidate Newt Gingrich, and his tag-a-longs like Senator Heller from repeating the spurious charges.  The President made his position very clear in a March, 2012 press conference. [MarketWatch]

OK, let’s move along to Point Four, Senator Heller’s actual proposal. [pdf file]  Section 101 reduces the Federal gas tax from 18.3 cents to 17.3 cents.  Aviation fuel is set at 24.3 cents, and ‘other’ diesel is set at 23.3 cents per gallon.  What reducing aviation fuel taxes has to do with what I pay at the gasoline pump escapes me, but this would make the major airlines happy.

Interestingly enough, scrolling down further in Section 101 we find: “EXCEPTION FOR FUEL HELD IN RETAIL STOCKS.—No credit or refund shall be allowed under this subsection with respect to any 1 highway motor fuel in retail stocks held at the 2 place where intended to be sold at retail.” So, how does the Heller Amendment directly benefit immediate stocks of retail gasoline?

Title II of Heller’s Amendment is the Swiss Cheese section — Drill Baby Drill — or whatever one wishes to call it.  Drill in the continental shelf – Fine. Drill in the Alaska National Wildlife Reserve – Fine.  Speed up the permitting process – Fine. I think we’ve heard all this before.  We could easily move along because this section of the Amendment is nothing we’ve not heard many times before from Republican members of Congress.  The reality is that even if we drilled ourselves into Swiss Cheese we still have only a small percentage of the world’s oil reserves and we’re still using some 25% of the world’s supply.  Another reality is that exploration today doesn’t automatically translate into low prices at the pump because — How Many Times Do We Have To Say It? — oil prices are set on the GLOBAL MARKET and if larger supplies from the U.S. or lower demand in the U.S. are offset by higher demand from China, India, or other nations, then drilling here doesn’t necessarily mean lower prices.

There are enough insertions into this amendment concerning EPA reviews and over-rides of Clean Water regulations in coastal areas to make anyone who drinks water or bathes the baby from his or her local sources very concerned. (page 10+)  If you happen to be a fish, this amendment is highly problematic.

Subtitle C, page 40,  is the Keystone Pipeline approval section.  Why is this perfectly predictable?   Talk about not having any immediate impact on gasoline prices!  There are sections of the pipeline unbuilt, and anyone waiting at the pump for a price reduction based on Keystone’s transportation of oil should probably make arrangements with the station owner for bed space — for several years.  Remember, Senator Heller said that the Administration should be concerned about the immediate impact of gasoline prices on the Nevada and nation economies, but this project is far into the future.

We also might want to remember where the Keystone Pipeline goes.   The one essential point to keep in mind about the Keystone project is that it is an EXPORT PIPELINE.   Oil from Canada is to be shipped to the pipeline terminals in the midwest and the gulf coast. [TransCan] The part about the Gulf Coast is important. Oil transported to Houston and Port Arthur, TX goes to worldwide refineries.  A quick look at the little  map below  shows the ultimate destination of the Keystone Pipeline:

The terminals, shown in the red circle, at Houston and Port Arthur, leave little doubt that the ultimate utility of the Keystone Pipeline project is to facilitate the transportation of  Canadian oil to world markets.

Title III (page 46+) concerns closing loopholes for dual capacity tax payers (read major oil companies.)   Out of 51 total pages of cut the gasoline tax,  Drill Baby Drill, Drill Everywhere, and help the Canadians ship oil to China and India — the Loopholes are closed, sort of, in five quick pages.

What was that definition of madness? Doing the same thing over and over again expecting a different result?  There is nothing new in Heller’s proposal. It’s the same Drill Now, Drill Everywhere scheme the oil companies have been promoting for the last several years, always being careful to avoid telling us that the oil is sold on the GLOBAL MARKET, and no matter how much we pump into the market if the Saudi’s cut production, or the Iranians and Israelis get into a fight, or there’s increased demand in India, or whatever moves the speculators — the price of oil won’t necessarily get any cheaper in the United States of America.  Oil is a global game.

And about the losses to the Highway Trust Fund created by the reduction in the gasoline and fuel taxes?  Senator Heller assures us that these will be replenished from the proceeds of the closure of the tax loopholes.  The CBO doesn’t seem to have scored the bill in this regard.

In short, Heller’s “Gas Price Relief Act” seems to be about everything BUT gas price relief.  It’s more like the American Petroleum Institute Relief Act of 2012.

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