The Obama administration has proposed the repeal of $4 billion in oil industry tax subsidies and is considering opening U.S. oil reserves in response to the rapid rise in the price of gasoline.
These two measures won’t make a dent in the average price of gas, which has reached $4.36 per gallon in California. In reality, an American president has little influence on how the international price of a barrel of oil is set. The process of industrialization in China and India, for example, are factors that increase demand, and Washington can’t control them. There also isn’t much that can be done about market speculators who raise prices or the behavior of governments such as Iran’s, which impacts the fuel supply.
At any rate, this is an election year. Voters are anxious about the price of gas and the opposition blames the president for this situation, as usual.
The White House’s response is to promote alternative energy sources without rejecting “everything else” in order not to appear insensitive to popular concerns. Therefore, they came up with a proposal to eliminate what amounts to providing public aid to one of the most profitable industries in the world, which posts annual earnings of billions of dollars. This is a reasonable idea, at least to reduce the federal deficit.
This is not a long-term solution, but without a doubt it’s better than Republican proposals to deal with the oil industry. On the one hand, the new budget presented by the House majority seeks to strip funding from the only oil regulatory commission in charge of preventing speculation. On the other, the opposition was against and defeated the Senate vote to eliminate the subsidy, arguing it would increase the price of gas.
We think federal subsidies to an industry should promote overall benefits and not become a tool to blackmail consumers and taxpayers.
Neither Democrats nor Republicans will be able to decrease the price of gas in the short or medium term. However, there is a big gap in how both parties address voters’ concerns.