There’s a disease going around Washington, probably carried in the water served in the Capitol. It’s called “act like an idiot,” or maybe it’s “I think you’re an idiot.” Whether it’s because of their own shortcomings or their very low esteem for their constituents doesn’t really matter. Either way, the illness makes Congressmen do stupid things.
A case in point is the recent decision by the House of Representatives to sell oil from the Strategic Petroleum Reserve (SPR).
The government established this reserve following the 1973 Oil Crisis in which Middle Eastern countries cut off our oil supply. The goal was to give ourselves a cushion in the event of another supply shock.
By selling it, Congress is choosing to forgo a resource meant to ease the pain of an unexpected setback. That way, they don’t have to do the hard work of raising taxes. Hmmm.
The SPR holds about 720 million barrels of oil. It was declared completely full in December 2009 when oil cost $78 per barrel.
As part of the financing for the Highway Bill, Congress is considering selling 101 barrels of oil from the SPR, or about 15% of our reserves.
We’ve taken oil from our reserves on several occasions, including after Hurricane Katrina wrecked some of our energy infrastructure around New Orleans.
But that’s not the case today. We don’t have a major supply shock.
Quite the opposite, we have something of an oil glut, which has driven prices below $50 per barrel. We don’t have any interruption along the supply chain – no storms or pipeline issues. Instead, we simply need the money.
As I’ve noted in previous articles, the federal tax on gasoline is 18.4 cents per gallon, and the tax on diesel is 24.4 cents. These taxes are flat, not adjusted for inflation, and haven’t changed since 1993, even though the world around us has changed dramatically.
Our cars are much more fuel efficient, so we can drive more miles per gallon. At the same time, inflation has eaten away at the purchasing power of the buck. These two trends mean that we put more wear and tear on our roads and infrastructure, while paying less in taxes at the pump to keep everything in good repair.
Leave A Comment