Wednesday, June 18, 2008

Cars don't run on snake oil

The latest Wisconsin Club for Growth newsletter (hot off the presses!) has an interesting commentary about the price of gasoline:

Enter Senator Barack Obama: the silky smooth, new kind of political leader offering hope as an antidote to the country's despair. Hope, and a plan to tax the so called "windfall profits" of oil companies.

"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois Senator said.

So while ordinary Americans suffer at the gas pump, Obama's plan is to put more money in the federal treasury and dole it out through unspecified new social programs. Obama and his colleagues, who failed to pass the measure in the U.S. Senate last week, are hoping that voters will give them credit for trying to poke oil companies in the eye with a sharp stick, inflicting pain on Big Oil as the masses suffer through the crisis. The problem for Obama and other Senators is that most voters are inconveniently pretty savvy about how the oil market really works. They also understand that the cost of growing government through any tax will far exceed the value promised from the so called relief.

In Wisconsin, Governor Jim Doyle and the Senate Democrats proposed a similar scheme to tax the profits of oil companies and use the money to pay for transportation projects. While most people had no problem sticking it to Big Oil, they had no faith whatsoever that Big Oil wouldn't stick it right back to them at a cost of 7 cents per gallon. And cutting into the oil companies' profits in Wisconsin would likely result in lowering our supply and driving prices up more as a result.

As Washington's snake oil salesmen are continuing a decades old energy policy of finger pointing and pontificating, it might seem as though the state's snake oil sales force are powerless to offer relief. But are they?

True, Governor Doyle and the legislature can't authorize domestic exploration of oil, which would increase supply and reduce our reliance on foreign oil. But what they can do will have a more immediate impact. The legislature and the Governor can remove the ridiculous, antiquated 9.18% minimum mark up on gasoline in Wisconsin. At four dollars a gallon, the markup increases the price at the pump by almost .40 cents a gallon. A reduction of that magnitude would bring some relief to the state as area residents, businesses and farmers face the devastating economic impact of flooding, tornadoes and other storm damage.

Someone should tell the governor the minimum markup law also adds to the price of golf balls. I bet the law would be repealed tomorrow.