Guest column submitted by U.S. Senator Mike Crapo
Taking the family camping did not used to be considered a luxury vacation. However, with the average cost of a gallon of gas hovering around $5 and much higher in many parts of our country, families may find these extras beyond family budgets. President Biden and Democrats argue oil companies are making “excessive profits” and propose imposing a windfall profits tax on oil and gas companies, among other gimmicks, like a gas tax holiday. Democrats are essentially asking Americans to ignore logic and believe raising the price of energy has the potential to lower energy prices. These distractions from real solutions will only drive up dependence on foreign oil and do nothing to help Americans. Rather, unleashing American energy production is a real solution that will improve energy prices and decrease our dependence on foreign countries.
President Biden’s anti-American oil and gas policies have decreased domestic production and led to higher prices. According to AAA, prices have risen $2.50 per gallon from the day President Biden was inaugurated. As prices continued to rise, President Biden touted the “incredible transition” away from fossil fuels and made no mention of the anti-energy actions that caused prices to increase more than 48 percent before Russia ever invaded Ukraine, actions like canceling the Keystone XL Pipeline, draining our Strategic Petroleum Reserve to its lowest level since 1987 and calling for new fees on domestic energy producers. Instead of undoing the damage, Democrats are doubling down on bad policies that could raise prices even higher.
Previously-enacted windfall profits taxes did not lower demand for nor reduce the price of oil. It is just bad policy. Congress previously enacted this tax on oil in 1980. The tax was repealed in 1988 after raising less than 30 percent of the estimated revenue. In 2006, the Congressional Research Service estimated the tax reduced domestic oil production between 1980–1988 by anywhere from 1.2–8 percent. At the same time, reliance on imported oil grew from somewhere between 3–13 percent.
Meanwhile, a gas tax holiday has even been panned by members of the President’s own party. According to results from the Penn Wharton Budget Model, suspending the federal excise tax on gasoline from July to September would lower average gas spending per person by between $4.79 and $14.31 over three months. For Idaho, the gimmicky gas tax holiday would save a consumer $14.75 over three months, or a little less than $4.92 per month. That would mean, at most, an Idahoan would likely be able to buy one extra Big Mac in each of the three months, with around 70 cents left over after each Big Mac purchase. In turn, this “holiday” would starve our infrastructure funds of $10 billion in revenue, requiring additional borrowing.
These unserious proposals should be shelved. We need pro-American energy proposals that help enhance U.S. energy independence and undo some of President Biden’s misguided energy policies. We should allow energy producers to develop the necessary pipeline and transmission infrastructure to move energy to market; bolster our domestic critical minerals supply chain so that we are less reliant on countries like China; and focus on alternative energy innovation, rather than government mandates, lowering the cost of alternate energy sources like advanced nuclear power.
We must work together to advance these measures as part of a comprehensive energy strategy to get a better handle on soaring prices and quit wasting time on ineffective policy that will further drive up energy costs.
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