Massachusetts Democrat Edward Markey, chairman of the House Select Committee on Energy Independence and Global Warming, held a press conference on Friday. His main purpose: bashing the Bush administration over the head with the handy club of oil prices. In between pointing out how the price of a barrel of oil had risen from $26, when George Bush took office, to almost $96 today, he also called for the president to send a message to “energy speculators” by allowing the release of crude oil from the Strategic Petroleum Reserve (SPR).
I think that the president must send a signal to the markets that he is not going to allow the speculators to determine the price of home heating oil and gasoline for all Americans.
Just by saying that he is going to release oil from the Strategic Petroleum Reserve, it would send a signal to all of those who believe that the Bush administration is going to keep its hands off of the oil marketplace, that he is interested in protecting consumers.
And once that happens, you’ll see a dramatic drop in the price of oil on the open market. Otherwise, the speculators will be king and the consumer will be the victim.
Criticism of how the Bush administration has been handling the SPR has been mounting ever since August, when the Department of Energy resumed building up the stockpile, even as oil prices surged. Earlier this month, seven Democratic senators complained that the buildup “sends a message to the marketplace that the Administration is comfortable with current price levels.” Not only did such complacency demonstrate callous disregard for the well-being of Americans about to be hammered by high heating oil prices during the oncoming winter, but, argued the senators, the revenue that would be saved if the DOE suspended its current purchases and waited for lower prices “could be used to develop alternative technologies that would genuinely make our Nation secure from energy disruptions, such as hydrogen, biomass, solar, wind, geothermal, hydropower, vehicle energy efficiency, building energy efficiency, industrial efficiency and weatherization.”
Markey’s energy speculator comments added a new twist to the existing grumbling. The role of energy traders in pushing oil prices to near all-time (adjusted for inflation) record heights remains one of the great unknowns in understanding what exactly is going on in energy markets today. But it’s an easy issue to capitalize on politically: Why should consumers have to pay higher bills because energy traders are pushing prices up by constantly betting that they will go up?
But a more provocative question would be to ask whether energy trader speculation might be doing the world a big favor. In effect, a high price of oil acts as a de facto carbon tax that will inevitably drive investment into exactly those alternative technologies that the Democratic senators want the government to subsidize. Without a doubt, it’s a regressive tax that disproportionately hits poor and working-class people. But it might make more long-term strategic sense for congressional Democrats to look for ways to cushion that blow that don’t involve pushing down the price of oil. Because actually enacting a carbon tax or cap-and-trade mechanism with teeth is going to be an extremely arduous undertaking, fought every step of the way by energy industry lobbyists.
It probably isn’t George Bush’s fault that oil prices are about to hit $100 a barrel, although invading Iraq certainly didn’t help. But maybe we should be applauding his possible culpability, not condemning it.