June 9, 2008

Will Bush-McCain Republicans Stand in the Way of Addressing the Root Causes of High Gas Prices?

Bush-McCain Republicans have talked extensively about the impact high gas prices are having on Americans across the country. With tomorrow’s vote on the Consumer-First Energy Act, they will have the chance to join Democrats in addressing the root causes of high gas prices. Democrats recently lead in passing bipartisan legislation to suspend filling of the nearly full Strategic Petroleum Reserve. Now, Bush-McCain Republicans once again have a choice between addressing this crucial issue by holding Big Oil accountable, cracking down on price gouging and market speculation and reducing our dependence on oil or continuing their record-setting obstruction. Americans feeling the pain of $4 per gallon gasoline hope that Republicans will work with Democrats on this critical legislation and other solutions to restore America’s energy and economic security.  

Roll Back Tax Breaks for Oil Companies and Invest in Renewable Energy – In 2004 and 2005, the Big Oil companies received tax breaks worth $17 billion over 10 years. The Consumer-First Energy Act will roll back $17 billion in tax breaks for oil and gas companies and instead invest those taxpayer dollars to improve consumer price protection, renewable energy development and energy efficiency technology through a designated Energy Independence and Security Trust Fund.

Force Big Oil to Pay Their Fair Share through a Windfall Profits Tax – Since the Bush Administration came into office, the five biggest oil companies have made over half a trillion dollars in profit. The Consumer-First Energy Act creates a 25 percent windfall profits tax on companies that fail to invest in renewable energy sources. This provision would not apply to the profits those companies reinvested in clean, affordable, domestically produced renewable fuels or renewable electricity production. The proceeds of the tax will be invested in consumer price protection, renewable energy development and energy efficiency technologies through a designated Energy Independence and Security Trust Fund.

Protect Consumers from Price Gouging – The Federal government’s authority and enforcement actions are inadequate to protect consumers from artificially created spikes in retail gas prices are inadequate. The Consumer-First Energy Act would give the President the authority to declare an energy emergency should there be a shortage, disruption or significant pricing anomalies in the oil market. Once an emergency is declared, setting an “unconscionably excessive price” during such an emergency would be deemed unlawful and subject to civil penalties.

Stop Market Price Speculation – The Administration’s failure to regulate the oil futures market has lead to exorbitant speculation. The Consumer-First Energy Act establishes two key limitations on speculation. First, the bill prevents traders of U.S. crude oil from routing transactions through off-shore markets to evade speculative limits and sets forth reporting requirements. The bill also requires the Commodities Futures Trading Commission to set a substantial increase in the margin requirement for all oil futures trades, contracts or transactions. Recently, one oil company executive indicated crude oil prices could be inflated due to speculation in the futures market.

Stand Up to OPEC – OPEC’s near-monopolistic control over oil prices has lead to record oil prices which have driven up the cost Americans pay at the pump. The Consumer-First Energy Act allows the U.S. Attorney General to bring an enforcement action against any country or company that is colluding to set the price of oil, natural gas, or any other petroleum product. Enacting this provision will make it clear to nations that participate in the oil cartel that engaging in conduct designed to fix the price of oil is illegal under U.S. law. As such, nations concerned with maintaining good diplomatic relations with the U.S. will likely be reluctant to blatantly act in a way that is counter to U.S. law. 

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