Say Anything Blog

A transcript from a television news report about gas prices last night:

(Sen. Byron Dorgan/ D-ND) “We need to work to put downward pressure on gas prices. This is a ridiculous situation.” Senator Byron Dorgan says the plan announced last week by fellow Senator John McCain to have a holiday on the federal gas tax might have a short term benefit to you at the pump

(Sen. Byron Dorgan/ D- ND) “He wants to borrow money to have a gas tax holiday. What I would like to do is have a holiday for some of these major integrated oil company profits.” Dorgan says another problem is the amount of oil the nation puts in reserves

He says each day about seventy thousand barrels of oil is put underground in this country in case of an emergency

(Sen. Byron Dorgan/ D-ND) “That puts upward pressure on gas prices. We ought to do exactly the opposite and put downward pressure on the gas prices.” However, with no relief in site… you continue to stomach the pain

The number of outright lies and half-truths apparent in even these few short statements is astounding.

First, it’s worth noting that there are a lot more than three major oil companies.  There are about a dozen major, international oil companies operating around the globe with several dozen more smaller, more regional oil companies competing.  None of these companies are “integrated” any more than Ford and Honda are “integrated,” though certainly that bit of populist brow-beating plays into Dorgan’s other economically-illiterate rantings quite well.

Second, no tax on a business in the entire history of market-based economies has ever driven the price of goods or services offered by that business down.  New taxes on business always result in the price of goods and services offered by that business going up.  So while Byron Dorgan talks about putting “downward pressure” on gas prices out of one side of his mouth, he’s talking about a tax that would do nothing but drive up gas prices out of the other side.  That Dorgan expects to be able to engage in that sort of cognitive dissonance without being called out on it is both a commentary on his opinion of the average North Dakotan’s intelligence and a scathing indictment of North Dakota’s media outlets which let him get away with such nonsense.

Third, as I’ve already pointed out, the amount of oil the government is putting into reserves has little-to-no impact on the overall oil market:

First let’s keep in mind that oil flows out of the strategic oil reserve as fast as it flows in.  Unless the size of the reserve itself is being expanded, the daily purchases of oil are done to keep the supply up as older oil in it is shipped out.  Much as with any product, the reserves can only be stored for so long and need to be kept fresh.  Thus some of the older reserves are sold to be used in the market while new reserves are purchased to keep the supply at the level mandated by Congress and the President.

This means that the SPR’s impact on the market is essentially neutral.  The Department of Energy lets as much out as is put in unless the overall size of the reserve is being expanded.  But that isn’t happening right now.

Second, let’s also keep in mind that 70,000 barrels of oil is a drop compared to overall US oil consumption.  Our country uses approximately 20 million barrels of oil a day.  Even if that 70,000 barrels of purchased oil didn’t have a neutral impact on the market (as I just explained) it would still represent just 0.35% of overall oil purchases in a day.

The conclusion?  Byron Dorgan doesn’t really care about high gas prices.  If he did, he’d advocate for lowering federal gas taxes and easing restrictions on domestic oil exploration (he has been a staunch opponent to oil exploration in the Alaska National Wildlife Refuge).  What Byron Dorgan really cares about is taxing the hell out of oil companies (as though they’re not already being taxed to death) so that he and his fellow tax-and-spend liberals have more of the people’s money to play with.