Yesterday I wrote this post discussing how Rhode Island Democratic Senator Whitehouse made comments on CNBC fully consistent with abrogating the rights of shareholders in major American oil companies by forcing them to allocate their capital according to Congress' desires.
After I wrote that piece, Maryland Democratic Senator Ben Hardin chimed in with even more stupidity.
In a late-day interview on CNBC with Michelle Caruso-Cabrera, Hardin demonstrated his complete lack of understanding of economics in general, and global energy economics in particular. Truly, this man must be an embarrassment to his state and the voters who elected him.
One of Ms. Caruso-Cabrera's salient attributes is her keen grasp of economics. Another is her absolute disregard for the discomfort she will cause with her questions. Both were on view in her interview with Hardin yesterday.
When Ms. Caruso-Cabrera asked Hardin how the US Senate could hope to control, let alone influence, the price of oil, when consumers in China and India are buying and driving more cars each month, consuming more and more gasoline and, thus, oil, Hardin had no effective reply, other than to allege that 'suppliers were colluding.'
When the CNBC anchor noted that the Senate had failed to act on initiatives to open US lands in Anwar to drilling, or our own shelves, thus opening us to criticism from the Saudis that we demanded of them what we won't do for ourselves, Hardin replied that 'now the problem is to bring down the price of oil for our less wealthy citizens,' or words to that effect.
As I have noted in the prior post, by way of a linked post on my business blog, it simply makes no sense to believe that because a company like Exxon or Chevron is dominant in oil, it should therefore invest heavily in unrelated energy technologies such as wind or solar.
This is a point that Hardin, like his colleagues Dick Durbin, Chuck Schumer, Diane Feinstein and Sheldon Whitehouse all fail to understand. From their comments during their witch hunt among American oil company CEOs yesterday, they clearly were more interested in grandstanding than in hearing the truth about global oil economics.
Back to Ms. Caruso-Cabrera's interview. By shrewdly asking questions which pointed to the global nature of demand for oil, its price being set by global supply and demand, and the US Congress' failure to allow for maximum oil and gas production onshore and offshore near the US coasts, she allowed Hardin to demonstrate his focus on demonizing oil companies, rather than truly searching for solutions.
If Hardin and his Democratic colleagues were really concerned about the effects of global oil prices on the less-fortunate among America's consumers, they could easily write legislation to provide a tax credit to lower-income consumers, based upon either their gasoline purchases, or some average gasoline consumption value, which kicked in above a designated price for a gallon of gasoline- perhaps $3.50. In effect, the Congress could choose to hedge gasoline prices for poor Americans, and borrow in capital markets to pay these drivers the excess of gasoline prices over what is a target set by Congress.
What will never work is for Congress to attempt to levy 'excess profits' taxes on oil companies. Durbin et. al. excoriated oil company executives for charging high prices for gasoline and 'maximizing profits' for their shareholders.
What do they expect? Do they really think these CEOs of shareholder-owned oil companies are going to turn socialist and subsidize American drivers to the detriment of those shareholders?
More enlightened production policies for oil and natural gas by both parties in Congress years ago would have lessened this global oil situation. Now, it's too late for a quick fix.
The best that can be hoped for is a Simon-esque rise in energy production, both oil and substitute fuels, brought about by the high prices being currently fetched for the liquid commodity.
The worst is to let the idiotic, stupid Democratic Senators loose with energy 'policy' that will likely reduce oil supplies and further complicate an already difficult global energy situation.
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