OUR VIEW

Energy crisis?

Get government out of markets

Gasoline prices, which have climbed steadily over the past year, got another big upward nudge last week when crude-oil futures reached a new intraday high of $98.62 a barrel. Around the Pikes Peak region, prices are hovering on either side of the $3 a gallon mark for regular unleaded at selfserve stations and we've seen it as high as $3.10. Meanwhile, government continues aggravating the problem.

State and federal taxes accounted for about 23 percent of the price of a gallon of gasoline in 2004, says the U.S. Energy Information Administration. Let's hope Colorado officials don't take a cue from some in Northern California. Officials of the Metropolitan Transportation Commission want to make it easier to increase gasoline taxes by calling them "fees" so only a majority vote is needed rather than the two-thirds approval required for taxes. Sound familiar? If the tactic succeeds it would add another dime to the price of a gallon in the ninecounty area around San Francisco.

As counterproductive as that is, consider how much worse the effect has been in choking off supply with restrictive government policies on exploration and drilling. As last week proved, when supply declines, prices increase. Crude oil prices surged after inventories declined by 800,000 barrels, according to National Center for Policy Analysis. Adding to the equation is our voracious appetite for auto travel. Motorists seem oblivious to increasing prices, even as their demand contributes to them. But prices didn't need to soar to $3 a gallon from less than a quarter in 1970.

"Instead of taking proactive steps to increase supplies, Congress has fiddled around while consumers burned what we had," says NCPA senior fellow H. Sterling Burnett. If Congress acted even 10 years ago, says Burnett, the recent sharp drop in crude oil supply could have been averted.

As any first-year economics student knows, there are two ways to reduce prices: reduce demand or increase supply. An ever-more mobile world makes rising demand a foregone conclusion. Emerging economies in India and China are pushing demand ever higher. Despite this reality, Congress continues missing opportunities to add to supply.

Burnett has two good suggestions: Allow more offshore drilling, and open the Arctic National Wildlife Refuge to oil exploration, which he said Congress should have done when it had the opportunity in 1990. Had Congress done so, U.S. Energy dependence on foreign oil already would be lessened and prices reduced.

Instead, Burnett observes, "Congress seems intent on passing bills that will make gasoline supplies even tighter, all the while shedding crocodile tears for the plight of the poorest consumers."

The persistent outlook for rising energy demand worldwide should have business and the government, to the extent it is involved, focusing on how to expand supplies as well as developing alternatives. Unfortunately, the most common way the government encourages alternatives is shoveling cash in their direction, in hopes that something good will come of it.

We'd prefer taxpayers held onto their cash and spend it on the energy sources they prefer; you know, a free-market approach. Some will argue that such a proposal puts emerging technologies at a disadvantage because of the tax breaks oil companies get that lower the price of gas. We're on board with dropping that corporate welfare. Anything that shields consumers from the true costs of their choices skews the market and makes analysis more difficult.

How about Congress working to allow costs to reach their true levels in the market and allow consumers to choose their energy sources? Then we'll see whether new energy sources being touted will be able to make it in the real world.'

Which is party of Big Government?

Soviet dictator Josef Stalin famously said, "One death is a tragedy; a million is a statistic." The same principle -- that the public can more easily grasp a small tragedy than a huge one -- can be applied to budget matters. Americans can get riled about a public official who misuses several thousand of their hard-earned dollars, but it's harder to get them worked up about more massive abuses. A thousand bucks is a tragedy, whereas trillions of dollars are too hard to comprehend, let alone to get angry over.

Well, Americans had better learn to get angry soon, given that the federal debt has now hit $9 trillion, which is a heck of a lot of money, even by government standards. That debt has soared from $5.6 trillion when George W. Bush took office. The president so far has pushed to increase the debt limit five times during his presidency, making the current debt limit $9.8 trillion.

When will it stop? The annual budget deficit also is a problem, although $163 billion sounds tiny compared with numbers followed by a dozen zeroes.

The Libertarian Party noted, in a statement released Thursday, "It took from George Washington to Ronald Reagan for the national debt to hit the $1 trillion mark -- a period of more than 190 years. Now, 27 years later, the national debt has risen more than 800 percent under three Republicans and one Democratic president. However, only $1.2 trillion of national debt was accrued during President Bill Clinton's administration, meaning the bulk of national debt comes from Republican administrations."