Parties Point Fingers on Gas Prices Legislation

June 10, 2008 — -- With the average price of gas in the United States now above $4, Senate Republicans today rejected a plan by Democrats to give the president the authority to declare an "energy emergency" and sue OPEC nations, prosecute price gouging, assess a "windfall profits tax" on oil companies and cut down on speculation in the energy markets.

The Democratic proposal, called the "Consumer-First Energy Act," was a grab bag of measures that Democrats cobbled together a month ago as gas prices were rising. At the time, the plan was meant as a counter-measure to a Republican plan that sought to encourage domestic oil exploration. Democrats in May voted down the Republican oil exploration plan, which would have done little for gas prices in the short term.

The Democrats' plan would also have done little in the near term.

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It was defeated on a largely party-line vote, 51-43, far short of the 60 votes it needed. A bill to extend popular tax credits for, among other things, alternative energy production, was also defeated in the Senate, victim to partisan disagreements over whether the tax credits should be accounted for by raising tax rates on hedge fund managers.

Meanwhile, there's nothing getting done legislatively to address the rising gas prices.

The bill would have allowed the U.S. attorney general to sue OPEC in U.S. courts for price-fixing and given the president anti-price gouging powers in cases of "energy emergency." And in perhaps the most contentious provision, it would have allowed for a "windfall profits tax" on oil companies that aren't using their record profits to invest in renewable energy resources and increased capacity.

Great Divide on Energy Policy

The parties' competing, failed plans highlight the very real policy differences between Republicans and Democrats on how to deal with long-term energy policy.

Republicans, by and large, would like to encourage more domestic oil production and exploration in the Arctic National Wildlife Reserve and off U.S. Shores. Democrats, meanwhile, want to focus on changing the ways the U.S. consumes energy — not just moving away from foreign oil, but moving away from oil altogether.

But while the average citizen pays more month-to-month and day-to-day to fill up his or her tank, each party has seemed content to point its finger at the other for not doing anything on gas prices in the short term.

"Its time to use the people's time in the U.S. Senate to work on the issues that matter to the people," said Majority Whip Sen. Dick Durbin, D-Ill., at a press conference before the vote on the Democratic plan, daring Republicans to allow debate on the legislation they oppose.

Senate Minority Leader Mitch McConnell, R-Ky., dismissed the Democratic plan as nothing more than a gimmick.

"The biggest hit wouldn't be to the energy companies. It would be the American consumer, who now dreads pulling his or her car into the gas station. Hitting the gas companies might make for good campaign literature or evening news clips, but it won't address the problem. This bill isn't a serious response to high gas prices. It's a gimmick," McConnell said.

The ranking Republican on the Senate Energy Committee, Sen. Pete Domenici of New Mexico, said, "The price of oil is just scaring the American people to death," but said the Democrats' energy proposal would do nothing but drive jobs overseas. Its "no energy plan at all."

Sen. Claire McCaskill, D-Mo., was just as stark in pointing the finger right back at Republicans.

"I hope the American people rise up and scream like they've never screamed before, 'How dare we do nothing,'" she said on the Senate floor.

It was a similar argument that Republicans made last week when Democrats staged a debate on legislation to fight climate change by capping the amount of greenhouse gases U.S. companies can emit. While the bill had some bipartisan support, Republicans complained that the bill, if passed, would drive up energy prices.

Windfall Profits

If there was a poison pill in the Democrats' unsuccessful plan today, it was a provision in the bill that would assess a windfall tax on oil companies not investing in renewable energy sources and increased capacity.

Durbin, the second-ranking Democrat in the Senate, said this morning of the oil companies and their record profits, "At some point you've taken too much out of the American economy."

Republicans say such a tax didn't work when it was passed by President Jimmy Carter and a Democratic Congress in the wake of the oil crisis in the 1970s and remained in place for much of the 1980s. Republicans suggested that renewing such a tax would actually raise gas prices in the short term.

"There is a consensus that a windfall profits tax is a bad idea except in the halls of Congress. However emotionally satisfying it may seem, it also affects most Americans retirement plans," Domenici said.

Bipartisan Energy Speculation Proposal Dies, Too

The most bipartisan portion of the Democratic bill had to do with energy speculation. It would have created new requirements for commodities traders to report off-shore trades with the Commodity Futures Trading Commission.

Democrats also suggested an amendment to the bill to boost funding for the CFTC, the staff of which has decreased by 10 percent during the Bush administration even as the number of trades it can monitor has shot up, according to Sen. Byron Dorgan, D-N.D.

In addition, the bill sought to stem energy speculation by forcing U.S. regulation for traders who route their trades offshore to avoid CFTC reporting and laws that cap the amount of futures commodities that can be held at one time.

"There is nothing in the laws of supply and demand that justifies [the run up in the price of oil]," Dorgan said. He called run-up in gas prices the result of an "orgy of speculation."

Sen. Patty Murray, D-Wash., said at this morning's press conference that Democrats would allow Republicans to try to strip the windfall profits section from the bill if Republicans would only let them debate the bill.

But one Republican, Sen. Arlen Specter of Pennsylvania, who supports the speculation measures, said on the Senate floor that he would not support a debate on the two measures married together.