Good question, and one that other Democrats will have to answer as they strategize on blame-shifting for gas prices. The White House and party leadership has vacillated at times between blaming “Big Oil” and its “corporate greed” for a lack of production, and Vladimir Putin for oil prices that had risen 52.5% over the previous year before Russia’s invasion of Ukraine, and 75.4% when counting from Joe Biden’s inauguration and his EO 13990 adding all sorts of red tape for the oil industry.

Punchbowl reported this morning that the political damage from energy inflation has prompted Democrats to consider a number of different strategies for the midterms … none of them coherent:

There’s the gas-tax holiday. This has been something that the White House has weighed in recent weeks. A group of vulnerable Senate Democrats floated this proposal several weeks ago, as have their House counterparts. Several Democratic governors are also pushing for this option.

But House Democratic leaders have gotten pushback from their rank and file and GOP colleagues about starving infrastructure of its main funding source just months after Congress passed a $1 trillion public works bill.

That’s certainly one consideration, but it’s not the only one. A gas-tax holiday would not actually address the causes of gasoline/diesel inflation but only its most obvious symptom. In doing so, it might spur more demand, which would then hike the price again as supply remains an issue. It would become a game of “chase the dragon” within a short period of time, and the expiration of the holiday would provide yet another price shock to consumers.

That’s still better than the other two options:

Rep. Peter DeFazio (D-Ore.), chair of the House Transportation and Infrastructure Committee, sounds like he would rather implement a “windfall profits” tax on the oil industry than a gas tax holiday. DeFazio believes oil companies would just pocket any tax rollback instead of passing it onto consumers. Here’s DeFazio:

“Do my colleagues really think the oil companies are gonna say, ‘Oh yeah, we’ll give ‘em the 18.4 cents per gallon at the pump?’ The distributors will say, ‘Oh yeah, we’ll give them 18 cents?’ And the retailers, who are always on the edge?”

In the first place, the tax takes place at the point of retail sale. Retailers collect it, not the suppliers. It’s taxed per gallon dispensed, not supplied. But even if that weren’t the case, why wouldn’t oil companies also pass along the cost of any “windfall profits” tax along to its consumers? That doesn’t even address the idea that oil companies make “windfall profits” in the first place, especially in terms of profit/loss balance sheets and margins. According to an analysis at CSI Markets, the average net profit margin for oil and gas producers was 4.94% in the fourth quarter of 2021 — decent but hardly “windfall.”

Some Democrats want to pursue the hair of the dog that bit ’em:

→ Rep. Mike Thompson (D-Calif.) has been working on legislation that would offer Americans a rebate, offset by leveling tariffs on countries that still buy Russian oil.

→ The leadership has also heard arguments about sending Americans direct payments for gas. Some Democrats on the influential Ways and Means Committee prefer this method. And it’s under consideration in some states, including California.

In essence, these Democrats want to force another extraordinary monetary expansion to deal with the outcomes of their previous extraordinary monetary expansion. That’s what off-budget stimulus spending requires, after all. And so … really? It appears no one’s paying attention to Larry Summers, even after his dire warnings about the American Rescue Plan turned out to be entirely prescient.

Finally, Joe Manchin wonders why his fellow Democrats assume that American oil and gas producers are the problem. Before tossing around such accusations, Manchin suggests asking them for their input first:

A day earlier, Manchin argued that North America needs energy self-sufficiency and net export capability now. We need to be Europe’s alternate to Russia and Iran for strategic reasons, while we “walk and chew gum at the same time” on alternate-energy development:

Manchin earlier argued that Biden should rescind his EO 13990 and eliminate all the red tape Biden erected to exploration and drilling. That certainly would send a big price signal to futures markets, and a resulting surge of production would amplify it, to the benefit of consumers and America’s strategic positioning against Iran and Russia. Biden remains, however, in thrall of the radical climate-change lobby, which means gas prices will continue to rise and Biden et al will continue to attempt to evade responsibility for it. And Democrats will pay a very large price for gas in November.

You Might Like
Learn more about RevenueStripe...