Federal Policies Affect Memorial Day Gas Prices, Hinder Deficit Reduction

As each of us returns from our own American Memorial Day travel experience to see some relatives, stay at the cabin, go to the beach, or just visit a hallowed spot to honor fallen heroes, we can’t help but have noticed one effect of a misguided federal policy: high gas prices, which are hovering just below $4 per gallon.

 The price of oil is set on the international market. But that international market responds to positive signals like increased production and expanded supply. Unfortunately for us, officials in Washington have imposed policies that constrain access to our vast energy reserves, hamstringing America’s participation in the global resource-based economy.

 A commitment to developing our domestic energy resources would allow our country to maximize the value of the dollars we spend on these important resources. That money could, for example, be reinvested in U.S. job creation and economic growth – a boost in activity that could generate government revenues without a bruising increase in tax rates. While Washington needs to get over its well-known addiction to overspending on programs, and an aversion to fixing our hopelessly broken tax system, a strong economy can play an important role in getting politicians to resolve our looming national debt crisis. But so far, we’ve yet to see this desperately needed change of habit.

 Instead, the President and his allies in Congress have decided to keep pursuing an energy agenda that seems destined to keep our nation from reaching its full potential for prosperity. Having been stung by the failure of their proposed “cap and trade” national energy tax, now they appear to be employing a piecemeal strategy. Exactly what that entails is starting to become clear, and if successful, it would have a detrimental effect on American wallets and purses, especially in Virginia. 

 In spite of a few recent, tiny steps to ease its regulatory grip, the executive branch has worked to halt drilling in the Gulf of Mexico, cancel plans to expand offshore drilling on our coasts and in Alaska, and put substantial regulatory barriers in the way of land-based production of natural gas, coal, and oil. These restrictions have limited billions of dollars in potential economic activity and have artificially inflated the costs associated with our energy needs. Not only will this ploy keep us from realizing home-grown sources of energy; it will also hobble our own companies’ ability to keep up in the race to access resources around the world. 

 The Administration has repeatedly proposed the elimination of tax deductions and credits that allow U.S. companies in many industries – saddled with one of the most burdensome tax codes in the industrialized world – compete internationally. But rather than scrap the whole system and build a better way to tax for everyone, the White House would target just one area for these eliminations: the oil and gas industry. This punitive tax treatment threatens not just the energy companies, but could send a destabilizing signal to the entire private sector. What statement are elected officials making to business owners if they levy debilitating taxes on productive industries? Predatory moves like these are not exactly confidence-builders at a time when our economic recovery is still inching forward in fits and starts.

 Most American’s don’t ask much of their government: low, simple taxes, efficient, frugal programs, plentiful business opportunities, sensibly limited regulations, and overall policies that let people work together to raise their own standards of living. Key to these activities is a steady supply of affordable energy, one that Washington continues to endanger.  The end result will likely be a further increase in the $3.72 per gallon price paid at the pump in Virginia. More important, our economy and our national debt could be worse off in the long run, leaving future Memorial Day vacations a lot less memorable for the next generation.