This Congress has been so shallow on the issue of energy costs that its pathetic. Americans are an increasingly ignorant people and the Democrats know how to exploit their fears and anger 100% without actually producing any solutions or being held accountable for anything.

Grilling American oil companies in congressional hearings is pointles....oil companies don't set the price of oil, the pit traders in NYC, London, and Hong Kong do. The biggest oil companies in the world arent even American anymore, and haven't been for some time.

Taxing oil companies for "windfall profits" is just a tax on the millions of Americans who either work in a petroleum connected industry or own stocks in it (and if you have a 401k or IRA account, you more than likely have a stake in them). I have yet to see anyone explain how this achieves anything other than to divert billions into the rathole known as "public research for alternative energy sources". Companies like BP and Exxon have already previously diverted tens of billions of dollars into this kind of research, co-partnering with other giants like GE to help wind and solar power mature. You can be sure they are going to spend less on it now.

We're one and a half years into the Democratic controlled Congress, and the price of gasoline has gone up almost 60% since January of 2006......where is the accountability?

Indeed—where IS that accountability? It’s pretty hard to destabilize portions of the middle east, claim that, not to worry—we’ll pay for the war with oil profits from the area we’ll quickly stabilize and then continue to maintain the economy. You’re partially right—it’s not the oil companies’ fault that the market has a scarcity. But it’s pretty predictable that if you destabilize the middle east and continue to deficit spend to fund a war rather than adopt a war time economic footing that you will undermine the economy and create a weakened dollar and a hit to the petro dollar which will in turn undermine credit markets, bring about inflation and ripple throughout the rest of the economy. All of that was foreseeable—and it doesn’t really get better with continued spending there we can ill afford and need to pay down those deficits to restore some semblance of economic order to the markets. We could certainly use some accountability for those errors.

It’s hard to blame the Democrats for that and the genesis of that price increase is not from the Democratic party (though I don’t much care having distaste for both parties). That said, punishing the oil companies is a bad idea; what we really ought to be doing is lessening the need for the actions that undermine that economy. Bring in some French engineers (yes, French—we haven’t built a modern nuclear power plant here in decades) and start building some up to date reactors. France generates 79% of its electricity through nuclear power and is the world’s largest net exporter of electricity—and it’s electricity cost is among the lowest in Europe. And it’s not just nuclear—Germany productively uses wind. If pursuit of nuclear, geo-thermal, hydro, wind and solar were to be used concurrently it might have sufficient impact to effect the economy positively.

Congressional hearings give legislators an excuse not to legislate. They can pretend to be "exercising their oversight responsibilities."

Every hour that congresspersons overlook things allows real Americans to do useful stuff without interference.

that laid the golden egg...

Even more heinous is the joke that Bio fuels help when all they do is tighten the grip of Politicises and CEO's on the public wallet even more. What is beautiful about all of this is that they do it under the guise of the public good. You said rightly when you said rat hole...and at the bottom of the rat hole the legislators and businessmen are waiting with empty buckets for the billions to pour in.

You spend almost the entire post raving about how high gas prices aren't the fault of the petroleum industry, only to blame them on....Congress?

LOL

Gawd forbid we should have windfall profits taxation, let's just continue the tax subsidy for Big Oil that's worked so well in the past. Oh, and invade a couple of more countries, too.

Venezuela, anyone? :)

but we as a country don't have the constitution for it. Increase supply....no one will do it...not the GOP ....not the Dems...they are all of one mind here and that mind is $$$$$.

You're right. Congress is posturing, and a windfall on oil company's tax isn't going to reduce gasoline costs. Demos has an excellent assesment of why oil prices are so high, and a solution. Hint... its not congresses fault. Anyone who thinks it is, lacks a basic understanding of economics.

So what's your solution? What did congress do wrong? (and don't say "ethanol" like Skeppy, that was as much Bush's pet project, and he was in the news defending it within the last week) What should they be doing?

Or are you just identifying a problem, and blaming Democrats as a reflex?

Right as rain you are, justoffal.

On a hunch, I did some research today, and relocated you.

I still have a post you wrote about me a long time ago. It is a treasure.

How do I get in touch with you via e-mail?

"What should congress be doing?" - ChicagoEngineer

Well, you're an engineer, and not an economist nor a political scientist.

Here's an answer in the form of a series of questions:

1. Which costs more, a pound of gasoline, or a pound of diamonds?

2. Which costs more, a pound of gasoline, or a pound of gold?

3. Which costs more, a pound of gasoline, or a pound of contact lenses?

4. Which costs more, a pound of gasoline, or pound of printer ink?

5. What should congress "do" about these things that are FAR, FAR more expensive than gasoline, do ya think?

6. Has ANYONE said, "Gee, gold is too expensive. We need some legislation to bring the cost of gold down"?

7. Where in the US Constitution is it written that the U.S. Congress, much less the Federal Government's, job is to keep costs at some arbitrary "affordable" level? Where is that written?

8. Did the Stone Age end because of a shortage of stones?

your intent is to place the burden of strarightening out the economy and the oil crisis on the Congress, relieving the Bumbler from responsibility.

Nonetheless, I agree that Congressional hearings and taxes on windfall profits will not accomplish anything. Instead, the Democrats should challenge the Bush White House and its supporters in Congress. They should pass a bill that restores Nixon's old 55 mph national speed limit. They should find ways to reward the use of public transportation and car pools for commuting. They should jawbone with major employers in the cities to stagger work hours to relieve rush hour congestion to save gas, if the employers have not already done so. They should also press employers to establish 4 day work weeks or even 3 1/2 day work weeks. They should pass another bill establishing a tax not on oil company profits, nor on gasoline, but on the sale of new vehicles that get less than 30 miles per gallon. The worse the gas mileage, the higher greater the tax. Such a tax, of course, would have to be phased in over, say, 5 years or Detroit would be put out of business.

So, those are some things the Congress can do. Bush, of course, would veto most of the bills I suggest, as he is the Whore of Houston, but he would look like a fool and I'm sure that Republicans in Congress looking to be re-elected in November would jump aboard override votes with alacrity.

Can you say "resource nationalism"?

Q: What happens when the price of oil goes through the roof?

A: People who "own" the oil (nation-states) realize it's a sellers' market and decide to take proportionately larger shares.

Q: What entities find and produce oil and gas most efficiently?

A: International Oil Companies (IOCs) IOCs are (for the most part) much more competent at that than State Oil Companies

Q: What do IOCs do with their "windfall profits"?

A: That depends. If they have exciting prospects, they invest in new oil and gas production. If not, they buy back their corporate stock.

Q: What do nation-states and SOCs do with their "windfall profits"?

A: States tend to regard profits / taxes on oil production as cash cows for social programs and other government spending. Thus, while SOCs have more or less open access to oil and gas reserves, they aren't as intent as IOCs on producing the stuff.

Q: What is the bane of IOCs?

A: Resource nationalism / "limited access" / "above-ground risk" (It's there in the ground, but they can't get at it.) e.g. ANWR, Iraq (11% of proved world oil reserves)

Q: What happens when IOCs can't get access to oil reserves"

A: It's produced in lesser volumes worldwide than it would otherwise be.

Q: What happens when global supply can't meet demand?

A: Oil is a highly fungible product so price increases.

Q: What is the elasticity of oil price as a function of demand?

A: Hard to know at this point. Many experts thought demand would collapse as $60 oil ruined national economies. That didn't happen and Goldman Sachs says $200 oil could be a reality in the not-too-distant future in the case of a "major disruption.

<link>

Q: What would happen if IOCs had free access to oil and gas desposits worldwide?

A: They would invest heavily is the most profitable geophysical regimes, less in less profitable regimes. That added investment would evoke more supply than would otherwise be available under resource nationalistic regimes.

Q: With more investment and production by IOCs, what might happen to price?

A: If history is a good indicator, price would decline with increased production. With China and India now in the mix, that might not happen.

Q: How long might increased production carry on?

A: Not long. The faster we produce our remaining reserves, the sooner we hit the forthcoming liquids production peak.

<link>

Q: What happens when we get to global peak oil?

A: You don't want to know.

Q: What's happening now?

A: Production has leveled out ("plateaued")...(to a large extent, because of "resource nationalism" / "limited access". This is convenient to owners (states) and producers (IOCs, SOCs) of oil and natural gas because demand exceeds available supply and prices have risen dramatically.

Q: Is that good or bad?

A: At present rates of production, remaining reserves will last longer and make more time available for transitions to alternative forms of energy. Less fossil fuel will be consumed than would otherwise be consumed. High oil prices will gradually transform our "economy" to be less wasteful / more conservative of energy resources. Whether that's good or bad depends on your sense of social stewardship and how you make your living.

Additional evidence for the effects of resource nationalism

<link>

You ask a good question. In fact, that is <b>the </b>question the Democrats have been asking for a long time, whether it is Iraq, the budget or oil prices. Our worst President ever has not been held accountable for any of his many major blunders. For the most part of Bush's tenure in office the Republicans have controlled all 3 branches of government. Today they still control 2 branches of the government. Even there the Republicans generous use of the filabuster in the Senate has meant that the Republicans even control the agenda in the Senate.

And you have the gall to blame the Democrats for the problems since the 2006 election. Yeah, right.

I think I know who you are..

:)