In the last few weeks stark differences have emerged between Dems and the GOP on energy policy. With gasoline >$4/gal politicians on all sides feel compelled to say/do something. A recap of what each side is offering:

Democrats:

Sue OPEC 

On May 22nd the House passed the “Gas Price Relief for Consumers Act of 2008.” The act does three things: 1) amend the Sherman Anti-Trust Act (written in 1890)  “…to make oil producing and export cartels illegal…”; 2) Creates a Petroleum Industry Antitrust Task Force inside the DOJ to study cartels; 3) Orders a GAO study on the effects of mergers in the petroleum industry. The bill was co-sponsored by 20 Dems, with Dems voting for the bill by a margin of 219 to 2. Venezuela, Iran, Saudi Arabia, and the rest of the cartel’s members have not yet responded to what efforts they will make to ensure their own national activities comply with this new US law.

“Windfall Tax” on US Oil Producers

Obama has called for a reprise of Carter’s “windfall taxes” on domestic oil producers. (Even the NYT editorial board eventually agreed that Carter’s version was a bad idea, although it took them almost a decade to figure it out.) The idea is that somehow the folks who produce oil for us will do a better job if we penalize them, or something.

“Compel” US Oil Producers to Produce More

On June 12 eighteen Dem Congressmen introduced the “Responsible Ownership of Public Lands Act.” The co-sponsors suggest oil companies leasing public lands might be secretly under-producing, a situation that they will remedy by imposing new fees on any acre leased that has not been drilled within one year. Never mind that it usually takes several years to determine whether newly leased land is worth drilling. After paying for the lease (usually 10 years) and the cost of exploration, the majority of these lands are returned to the government un-drilled. Not good enough for the Dems.

Increase Regulation of Energy Capital Markets

Just this weekend Obama outlined legislation directing the Commodity Futures Trading Commission to “investigate proposals” for increasing regulation over the way oil futures are trades. New Jersey Governor Jon Corzine added, “I think everyone believes there’s too much speculation in the oil markets. A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market.” Corzine thus neatly justifies this attempted power-grab by his estimate of what “people” think - note Corzine (a former bond trader and Goldman Sachs CEO) never says what he actually believes.

“Nationalize” US Refineries

Video of Maurice Hinchey (D-NY): “We (the government) should own the refineries. Then we can control how much gets out into the market.”

“Socialize” Domestic Oil Companies

Video of Maxine Waters (D-CA) tells the President of Shell Oil she wants to “socialize” his company.

Republicans:

Increase Production 

In his radio address on June 21 Bush made 4 proposals: 1) Drill ANWR; 2) Lift the 25 year ban on drilling on the outer continental shelf (OCS); 3) Lift the ban on exploiting shale oil reserves in the American West; 4) Increase refining capacity by allowing new refineries to be built in the US for the first time in 30 years.

On the second point its worth noting that Brazil has recently announced two massive oil discoveries on its own OCS, possibly turning that country into one of the largest oil exporters within the next 10 years. Its also worth noting that Canada, Mexico, Cuba, and even China (in Cuban waters less that 100 miles from Florida) are all already exploring the North American OCS.

Although McCain is still only “considering” ANWR, he largely agrees with everything Bush proposes. The American people apparently do too - according to Rasmussen only 18% of Americans oppose OCS drilling (including only 37% of self identified “liberals”). McCain is also calling for the construction of 45 new commercial nuclear reactors. The last commercial nuclear reactor in the US to come online started construction in 1973.

The GOP proposals are straightforward. They acknowledge the reality of increased oil demand from emerging economies like China and India. The solution is removing regulatory obsticles that make the US the only major oil producer in the world where new production is effectively illegal.

Some Dem proposals are laughably stupid (i.e. declare OPEC illegal so we can sue them). The rest seek to turn public concern about oil prices into yet another opportunity to expand regulation, expand government power, and grind down and demonize the private economy.