President Bush tried to explain the need for the Republican energy proposal:
WASHINGTON (AP) – President Bush on Wednesday pushed Congress to pass a long-stalled energy bill before its summer recess, but acknowledged there is nothing he can do to ease rising gas prices in the short-term. “I wish I could simply wave a magic wand and lower gas prices tomorrow,” Bush said. Bush spoke as the House began considering a broad energy bill that includes $8.1 billion in tax breaks, mostly for energy companies, and would open the Arctic National Wildlife Refuge in Alaska to oil development. “The summer travel season is fast approaching, gas prices on the minds of millions of Americans,” he said. “Members of Congress can send an important signal that they are serious about solving America’s energy problems by getting a bill to my desk before the summer recess.”
Passing this piece of pork barrel legislation will no have impact on gasoline prices this summer and likely have little effect on prices long-term. It will add to those deferred tax bills that Bush has been racking up since he took office.
President Bush had Dick Cheney craft this special interest legislation back in 2001 when the nation was facing a couple of energy-related problems that did warrant policy attention. One was the surge in electricity prices faced by many Californians. Of course, the appropriate solution to the cartel behavior of certain suppliers was to have FERC impose price controls, but President Bush at first opposed this move.
The other problem that policy makers should have addressed back then was electricity transmission grid problem, which alas has not been addressed because of partisan wrangling. Rather than pushing for expensive special interest favors at taxpayer expense that do little to address our energy needs, why not simply adopt one of the many proposed solutions to the grid issue? Or does President Bush wish to put our kids deeper into debt so as to pay off his contributors? The signal that would be sent by passing this bill is that Congress is not serious about addressing the massive deficit problem.
Update: John Quiggin offers a few thoughts on the economics of high oil prices, while Matthew Yglesias highlights some discussions on the politics as he once again shows he is becoming a fine economist as well.