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SPOTLIGHT
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Policy solutions for high gasoline prices

Published on -6/20/2013, 11:07 AM

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Gasoline prices have risen during the first half of this year, pushed up by strong increases in world crude oil prices. That's hurting American families, many still dealing with unemployment and stagnant wages.

The White House says it's concerned about gasoline prices. But the Obama administration's policies aren't helping the American people much. And some of their proposals, especially those on taxes, and a barrage of new regulations are a recipe for disaster.

The administration gets a few things right about gasoline prices. World markets set the price of crude oil, which is most of the cost of gasoline. The administration is also right that help on prices can come from more fuel efficient automobiles that reduce demand.

But the administration misses the boat on the value of more domestic oil production, which they discourage and say won't help gasoline prices -- even though they have also considered releasing oil from our Strategic Petroleum Reserve for that express purpose.

Increasing oil production in the U.S. would help consumers. It would add supplies that would help put downward pressure on gasoline prices. And even a decision to encourage more production would signal to markets that more supply was on the way. More American production also would reduce reliance on imported energy from less stable nations, and it would mean more jobs and more revenue to the government.

And increasing production here at home is possible thanks in large part to the independent oil and gas industry whose commitment to investment and job creation in the U.S. has led to an American oil and natural gas revolution that has significantly increased both our oil and natural gas resources. The International Energy Agency believes that the U.S. could be producing more oil than Saudi Arabia by 2020.

If the Obama administration really wants to help consumers, they need to do an about-face on their approach to energy policy. The administration continues to advertise the fact that oil production has been increasing on their watch, but in fact their policies have discouraged development. The administration has slowed permitting and leasing on federal lands and waters and done nothing to expand areas open to development. Total oil production is up, but only because of what is happening on private and state lands.

Besides encouraging more domestic oil and natural gas production, the administration should also rethink its approach on taxes and regulations if they want to help consumers.

The administration needs to stop obsessing about raising taxes on a single industry. The oil and gas industry pays its fair share. The industry delivers substantial revenue to our government and pays income tax at effective rates higher than most other industries. Higher taxes on the industry would depress investment in new oil and natural gas production and diminish growth in supplies that could help push prices down.

The administration also needs to pull back on the onslaught of multi-billion dollar regulations they have planned for the oil and gas industry. While the benefits of these new rules would be negligible, they would drive up costs significantly. These are costs on the economy that impact all consumers.

The Obama administration could do a lot better job on gasoline prices. Efficient use of supplies is important. An all-of-the-above approach to energy is important. But if the administration is really serious about helping consumers, they will expand domestic oil and natural gas development and abandon their counterproductive ideas on more taxes and overly stringent or unnecessary regulations.

Edward Cross is president of the Kansas Independent Oil and Gas Association.

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