The Magazine

Over to You, Speaker Pelosi

Let's drill.

Jul 28, 2008, Vol. 13, No. 43 • By MATTHEW CONTINETTI
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Gas is still at $4 a gallon, but the good news is there's an emerging consensus on a measure that would help: Drill for more oil here at home. President Bush dropped the executive ban on offshore oil and natural gas exploration last week, and House GOP leader John Boehner plans to lead a congressional delegation to Colorado and Alaska to highlight America's abundant energy resources this week. Polls show more than two-thirds of the public support increased domestic energy exploration and production. Guess who stands in the way.

Congress has its own ban on offshore energy exploration, and the Democrats who run Congress have shown no sign that they are willing to follow Bush's example. They have preferred to make excuses--about why the price of oil is rising, who is to blame for its rise, and why increasing domestic supply won't do anything to ameliorate the problem.

It isn't working. Democrats are losing the fight over gas prices, and they know it, too.

They have slowly changed positions as the absurdity of their arguments has become clear. First they ignored the problem altogether. Earlier this summer, Senate Democrats wasted time debating a carbon cap-and-trade scheme that would have raised energy prices dramatically at a time when those prices were already at record highs. Cap and trade crashed and burned.

For a long while, Democrats simply blamed the oil companies for the spike in gasoline prices. They proposed new windfall profits taxes on "Big Oil," which would of course be passed on to the consumer, making gasoline even more expensive. They even threatened to sue OPEC. Nonstarters all. The price of oil didn't drop.

Then the Democrats--and, to their discredit, plenty of Republicans--decided to scapegoat "speculators." The thinking here is that commodities traders have a financial interest in watching prices go up. Well, some do. Others--those betting prices will fall--do not. The fact that there are traders of oil futures has nothing to do with why those prices increase. The "speculators" just make bets on where the price of a commodity will be by a certain date. This year, the bets on higher oil prices have been good because the falling dollar, rising global demand, and political instability in the Middle East and Africa are driving the price of this particular commodity upward.

When ignorance and finger-pointing didn't work, Democrats dusted off the law of supply and demand. But they refused to acknowledge that one of the best ways to increase supply is to expand America's production capacity by opening new territory to exploration. Rather, they demanded that Bush release oil from the Strategic Petroleum Reserve, forgetting that the reserve is called "strategic" for a reason. It's meant to be used in a national emergency. Bush has stopped new shipments to the reserve, increasing supply on the (microscopic) margins.

Meanwhile, New York senator Charles Schumer demanded that other oil-producing nations increase production in order to lower U.S. gas prices. If only the Saudis "produced half a million barrels more oil a day," Schumer said, "the price would come down a very significant amount." Maybe so. But why rely on the Saudis? Why not take steps to increase our own supply? Are we dependents?

The Democrats' next tack was to suggest that the oil companies are sitting on millions of acres of oil and not doing anything about it. Last week House Democrats tried to pass a "use it or lose it" law that would have denied federal land leases to oil companies if the companies couldn't demonstrate that they were producing energy on existing plots. The bill was rejected, and for good reasons. For one, there is already a "use it or lose it" provision in federal law. For another, the bill was premised on the idea that 4.8 million barrels of oil a day could be extracted from these "unused" lands. Boehner has asked Speaker Pelosi where this unsubstantiated statistic comes from. She hasn't said. That is because the number is a joke.

Finally, Democrats are attacking the pro-drilling folks for thinking ahead. Exploring deposits on the continental shelf "wouldn't produce a drop of oil for seven years or longer," wrote Senator Dianne Feinstein. Nobel laureate Al Gore said last week, "It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for more oil ten years from now."