Tuesday, June 13, 2006

Not Good For Michigan or America

My U.S. Congressman Sander Levin has a newsletter his office sends out about once a week informing constituents of the latest congressional action. In the week of May 22 – 26, 2006 issue was a headline saying:

“House Narrowly Approves Oil Drilling in Arctic refuge.”

I think drilling in ANWR (Arctic National Wildlife Refuge) is long over due and a small step on the path of reducing America’s dependence on foreign oil. Unfortunately, Mr. Levin voted against the legislation. I think his reasons are misguided in the extreme.

First, he says, “Drilling in ANWR will not bring down gas prices—not today and not tomorrow….” While this is probably true, it is not the sole or even the main reason for drilling in ANWR. Oil companies should have the right to buy the drilling rights to any property at market prices. But, not counting ANWR, the government has placed 85% of offshore oil fields off limits to any drilling. If people would like to know the why behind high gas prices, that is one reason. Placing most of the oil fields off limits then crying about a dependency on foreign oil is being less than honest with the American people.

Lets look at another claim by Mr. Levin. “Although over 95% of the recommendations in that plan (Bush’s 2001 energy plan) have been implemented, our nation still confronts sky-high gas prices, growing dependence on foreign sources of energy, and record pro! fits (sic) for the oil industry.” Notice how he names two maladies, high prices and dependency on foreign energy and then lumps in “record profits” as if they were of equal malevolence.

In other words, Mr. Levin believes that morality is a matter of numbers; if you earn millions of dollars you’re virtuous or at least amoral. But if you earn billions you become evil and are placed alongside other undesirable human conditions.

This kind of thinking is known to economists as the intrinsic theory of wealth. It holds that wealth is a static amount and therefore if someone has a lot of it then it must be at the expense of someone else thus government must step in and redistribute the wealth more fairly. Of course this theory was thoroughly discredited long ago. Wealth creation is a very dynamic process. Yet it is sad to see Congressman Levin still believing in it and pandering to one of the worst human emotions, envy, the hatred of success for being success.

But Congressman Levin is not alone. His brother, Michigan Senator Carl Levin and colleague Debbie Stabenow have both said they will support a windfall profits tax on the oil companies. Consider the kind of message this sends to large corporations. “You had better not be too successful, too efficient, too profitable or we’ll nail you”

I understand that the price of gasoline is a national problem but consider what thoughts might be going through the minds of CEOs of large corporations thinking about moving to Michigan. “Do you think it’s a good idea to set up shop in Michigan since the main politicos there are so hostile to profits and corporations in general?”

I’ve heard the argument “I wouldn’t care how much money the oil companies make if they would just keep the price of gas nice and low.” This argument ignores the fact that market prices are set by how much people are actually willing to pay, not by how much they’d prefer to pay. It also supposes that oil execs sit in their offices and every morning say “Well, how much should we charge for gas today?” That is ridiculous.

The price of gas is determined by the price of crude oil, which is being bid upon daily by nations all around the globe. Most of these bidders are governments not private oil companies. The OPEC cartel controls most of the oil out of the Mideast. Most South-American oil companies are state owned and Russia recently nationalized their oil industry. Yet the Levins and Ms. Stabenow want you to believe it’s all the fault of evil, greedy private enterprise, and that governments are faultless, especially ours.

A myriad of regulations and laws have prevented the building of refineries for about 30 years. But Congressman Levin and Michigan Senators Carl Levin and Debbie Stabenow are not about to get the government out of the way. That is why keeping these politicians in office is not good for America or Michigan.

No comments: