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Oil and politics don't mix

April 28, 2006

NO DOUBT PRESIDENT BUSH hoped his Tuesday speech to the Renewable Fuels Assn. would mollify grumpy Americans tired of high gas prices. But by proposing dubious policies that -- at best -- might save a few cents per gallon in the short term, while doing little to address the underlying problem of U.S. oil dependence, the president did something worse than nothing: He ushered in a silly season for wrongheaded, economically ignorant proposals by headline-chasing politicians.

Just a few short months ago, Bush was paying lip service to addressing the country's oil "addiction." On Tuesday, he offered us gas junkies a cheaper, faster fix by deferring new deposits to the Strategic Petroleum Reserve. And now, after a week's worth of 1970s-style economic rhetoric, the prospects for successful detox seem all the more distant as public officials scramble to follow the president's lead in dreaming up their own "solutions" to the oil market. Like most insta-legislation rushed to the floor in the wake of controversial news -- think Terri Schiavo -- the gas-price proposals should be ignored and scorned.

Take the calls to root out alleged misdeeds by oil companies. Sen. Charles E. Grassley (R-Iowa) wants to look at Big Oil's tax returns "to make sure [they] aren't taking a speed pass by the tax man." Sen. Charles E. Schumer (D-N.Y.) proposed breaking up the industry altogether. And state officials want their piece of the witch hunt too. On Tuesday, Gov. Arnold Schwarzenegger announced that he had sicced the California Energy Commission on the case. In Arkansas, a candidate for attorney general also pledged to investigate oil companies, even though that state's anti-gouging law only applies during emergencies.

Everyone likes to see a villain squirm. The problem is, the Federal Trade Commission already has been sniffing out price gouging in the aftermath of Hurricane Katrina and has yet to uncover one instance of illegal behavior. Election-year investigations into marketwide collusion and gouging are window dressing, nothing more.

Worse are renewed calls to authorize drilling in the Arctic National Wildlife Refuge and to relax environmental restrictions on polluting refineries. A still-lower circle of populist hell is reserved for embarrassingly baldfaced sops to voters, such as the Senate's $100 taxpayer refund. Or that body's proposal to increase farm energy subsidies by $1.5 billion. Or its push for a 60-day federal gas tax holiday.

All of these proposals would provide scant relief even while encouraging continued fuel overuse. As Federal Reserve Chairman Ben Bernanke testified before Congress on Thursday, "Unfortunately, there's nothing, really, that can be done that's going to affect energy prices or gasoline prices in the very short run."

Sensible policy would focus on curbing consumption. Indeed, if politicians were being honest about breaking the addiction, they'd admit that it might make sense to hope that gas prices stay high -- which would drive down demand and perhaps spur businesses to get real about alternative fuel technologies and improved auto mileage.

As a Texas governor running for president wisely said in 2000, the "Strategic Reserve should not be used as an attempt to drive down oil prices right before an election."

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