Gas prices spur new energy bills (Dubya will veto

Gas prices spur new energy bills
High gasoline prices have sparked Congress to sponsor a gusher of energy legislation, some of which would face a veto by President Bush.
Posted on Sat, May. 24, 2008
BY KEVIN G. HALL khall@mcclatchydc.com

WASHINGTON -- With the price of oil and gasoline at record levels and sure to be a campaign issue in the fall, Congress is moving on a host of energy-related measures.

Most of them, however, sound good but won't significantly boost production or lower prices in the near or even medium term. Some tax measures would encourage the development of alternative fuels, but these are only the first steps on what will be a long path.

The first to reach the president's desk was a measure to halt temporarily the placement of any more oil into the Strategic Petroleum Reserve while crude oil prices remain high. President Bush opposed the measure, but he signed it Monday because it passed with wide support from both Democrats and Republicans.

• Biofuels: The Senate this week overrode President Bush's veto of a massive farm bill, and that means a host of ethanol-related measures will become law. These include a production tax credit of $1.01 per gallon through the end of 2012 for cellulosic biofuels -- which are made from wood chips, switch grass and other non-food feedstocks.

Ethanol producers that make their bio-fuel from corn or other food products will see their tax credit reduced by 6 cents, to 45 cents per gallon, to reflect this segment of the industry's maturity.

To protect U.S. producers from foreign competition, the farm bill extends an expiring tariff on imported ethanol to 2010.

• Energy taxes: Senate Democrats in early May announced plans to move legislation that would impose a windfall profits tax on oil companies. They propose a 25 percent tax on profits above what is ''reasonable.'' It would apply only if these profits aren't reinvested in finding new renewable sources of energy or expanding refinery capacity.

Many of the largest refiners already have begun or are planning to expand U.S. capacity to refine crude oil into gasoline. Oil executives warned Congress this week that such a tax would reduce investment and drive prices higher. If it passes, President Bush is likely to veto it, and Senate Democrats don't appear to have enough Republican votes to override him.

The Senate Democratic energy tax plan also calls for rolling back about $17 billion in oil industry tax incentives. A similar measure passed the House of Representatives last year, but such an effort is hard to get through the Senate because its rules allow a single senator to block legislation.

• Expanding oil exploration and production: House and Senate Republicans have offered a counter to the tax plan that calls for opening Alaska and the U.S. coastlines to greater oil and natural gas exploration and production. It, too, is unlikely to pass in an election year. It's estimated, though, that opening the Arctic National Wildlife Refuge to the oil industry would reduce crude oil prices, now more than $130 a barrel, by about 75 cents a barrel.

• Gasoline taxes: Presidential hopefuls Sens. Hillary Clinton, D-N.Y., and John McCain, R-Ariz., both have called for a temporary gasoline tax holiday this summer that would offer consumers a break from the 18.4-cent federal tax on every gallon of gasoline. Clinton would offset the lost revenue by taxing the major oil companies; McCain hasn't said how he'd pay for it. The proposal appears to be going nowhere in Congress.

• New tax incentives: A tax bill that includes $17 billion in energy tax incentives for the development of renewable energy resources -- some of them overlapping what's in the farm bill -- passed the House on Wednesday. But the margin, 263-to-160, wasn't veto-proof, and the bill's prospects in the Senate are uncertain, at best.

• OPEC: The House on Tuesday passed by a large veto-proof margin a bill that would empower the Justice Department to bring antitrust action against nations that belong to the oil cartel OPEC. This measure passed the House last year, too, only to be stripped out of Senate energy legislation.

Read this and I think you will agree the oil industry has already been Nationalized in the US;

It was common in those days, as it is in ours, to identify the Communists as leftist and the Nazis as rightists, as if they stood on opposite ends of the ideological spectrum. But Mises knew differently. They both sported the same ideological pedigree of socialism. “The German and Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer’s goods for his consumption.”

The difference between the systems, wrote Mises, is that the German pattern “maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets.” But in fact the government directs production decisions, curbs entrepreneurship and the labor market, and determines wages and interest rates by central authority. “Market exchange,” says Mises, “is only a sham.”

Mises’s account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the “monster machine” of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.

“Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found,” explains Reimann. “The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error.”

Reimann quotes from a businessman’s letter: “You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.’ Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

“While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer’ or ‘saboteur,’ followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.

“There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews’ (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen.”

As Mises says, “independent” only in a decorous sense. Under fascism, explains this businessman, the capitalist “must be servile to the representatives of the state” and “must not insist on rights, and must not behave as if his private property rights were still sacred.” It’s the businessman, characteristically independent, who is “most likely to get into trouble with the Gestapo for having grumbled incautiously.”

“Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party,” recounts Reimann. “The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz’s bakery and Herr Schmidt’s butcher shop. He would regard these men as ‘enemies of the state’ if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble.”

“Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations,” Reimann explains. “The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling.”

Says another businessman: “Each business move has become very complicated and is full of legal traps which the average businessman cannot determine because there are so many new decrees. All of us in business are constantly in fear of being penalized for the violation of some decree or law.”

Business owners, explains another entrepreneur, cannot exist without a “collaborator,” i.e., a “lawyer” with good contacts in the Nazi bureaucracy, one who “knows exactly how far you can circumvent the law.” Nazi officials, explains Reimann, “obtain money for themselves by merely taking it from capitalists who have funds available with which to purchase influence and protection,” paying for their protection “as did the helpless peasants of feudal days.”

“It has gotten to the point where I cannot talk even in my own factory,” laments a factory owner. “Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office.”

Reports another factory owner: “The greater part of the week I don’t see my factory at all. All this time I spend in visiting dozens of government commissions and offices in order to get raw materials I need. Then there are various tax problems to settle and I must have continual conferences and negotiations with the Price Commission. It sometimes seems as if I do nothing but that, and everywhere I go there are more leaders, party secretaries, and commissars to see.”

In this totalitarian paradigm, a businessman, declares a Nazi decree, “practices his functions primarily as a representative of the State, only secondarily for his own sake.” Complain, warns a Nazi directive, and “we shall take away the freedom still left you.”

In 1933, six years before Reimann’s book, Victor Klemperer, a Jewish academic in Dresden, made the following entry in his diary on February 21: “It is a disgrace that gets worse with every day that passes. And there’s not a sound from anyone. Everyone’s keeping his head down.”

It is impossible to escape the parallels between Guenter Reimann’s account of doing business under the Nazis and the “compassionate,” “responsible,” and regulated “capitalism” of today’s U.S. economy today. At least the German government was frank enough to give the right name to its system of economic control.

Here is the link for this article:

http://mises.org/story/47

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