Jewish World Review Dec. 7, 2005 / 6 Kislev, 5766

Paul Greenberg

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Consumer Reports

QUICK, RAISE GAS PRICES! | Now that the price of gasoline has plummeted across the country, shouldn't the Senate committee that was berating oil company executives when prices were up now be praising them when prices are down?

If the price of gas can be so easily manipulated by the oil companies, shouldn't the senators be giving those corporate execs medals instead of tongue-lashings? Fair is fair.

Think about it: Instead of talking about a "windfall profits" tax to punish Big Oil, shouldn't senators now introduce legislation to reward Big Oil by cutting its taxes?

Wouldn't that be the logical thing to do if populist politicians really believed in the kind of through-the-looking-glass economics they propound in congressional hearings?

There's another way to peer through that looking glass:

What about the millions of Americans whose retirement depends on their mutual funds, in which oil stocks are heavily represented?

How many of those pension funds are dependent on the oil companies' profits, and what happens to those pensions if the profits evaporate? Don't the pensions shrink, too?

Instead of talking about laws against price-gouging, shouldn't Congress now be holding impassioned hearings, complete with widows and orphans, to ask how it can help increase Big Oil's income to help those dependent on it?

Have these politicians no conscience?

Besides, how can the oil companies build those new refineries senators were demanding just the other day unless their profits increase?

Even now gas prices are below pre-Katrina levels. Unless another hurricane comes along and again wipes out two-thirds of the oil production in the Gulf of Mexico, American oil producers will face constantly dropping prices. Deflation is staring them in the face, yet no one is riding to their rescue! Where's the U.S. cavalry?

Worse news could still be ahead: The price of gas, which hovered around $3 a gallon on Labor Day, now has dropped some 80 cents and could dip below $2 a gallon by Christmas. Oh, the humanity! Shouldn't Congress act before it's too late? Disaster impends!

Shouldn't the same editorial cartoonists who not long ago were depicting Big Oil as a bunch of vultures preying on the poor American motorist now be drawing the oil companies in tatters and rags, the innocent victims of the gas-guzzling American consumer filling up his SUV at bargain prices?

One caricature is as fair — or rather unfair — as the other.

Whenever gas prices spike, the resulting outrage gives politicians the perfect opportunity for a little demagoguery. At such times all kinds of taxes are threatened, demands made, laws drafted and cries cried. The only law ignored is the one that best explains the ups and downs in the price of oil — the law of supply and demand.

As for raising taxes on Big Oil, a favorite political gambit, when Congress enacted a windfall profits tax on the industry in 1980, oil production in this country fell dramatically (of course) and imports of foreign oil rose (of course again). Is that what Congress is trying to do — help out the oil sheiks, or maybe Venezuela's latest strongman?

If you want to reduce the supply of any commodity — domestically produced oil, for example — just tax it more.

Government is already doing a lot to keep the price of gas up. Across the country, consumers are paying an average of 46 cents a gallon in federal and state taxes, but surely it could do more.

There is also talk of putting a ceiling on the price of oil, i.e., enacting price controls. It's as though the country had forgotten the disastrous results of the Nixon Era's price freeze: long lines at the fuel pumps and general disruption in the economy. Nothing exacerbated the oil sheiks' boycott of 1973 like the Nixon administration's response to it.

When prices rise again, and they will, some genius will start talking up gas rationing, and once again the discussion will produce more heat than light. Overlooked in all the rhetorical combustion will be the realization that this country already is operating under the most efficient, constantly adjusting form of rationing known to man. It's called the free market.

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JWR contributor Paul Greenberg, editorial page editor of the Arkansas Democrat-Gazette, has won the Pulitzer Prize for editorial writing. Send your comments by clicking here.

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