The Gang That Couldn't Think Straight

Barack Obama seems to have shifted his position on offshore drilling. Yesterday in an interview with the Palm Beach Post he said,

“My interest is in making sure we’ve got the kind of comprehensive energy policy that can bring down gas prices. If, in order to get that passed, we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage — I don’t want to be so rigid that we can’t get something done.”

There are few things in life you can count on. One of them is that when a politician uses the word “comprehensive” in referring to a plan or policy, there is going to be an assault on our treasury, our liberty and our constitution. This case is no exception.

Obama was referring to the plan put forth by the so-called “Gang of 10” made up of five Democrat and five Republican Senators. As is usually the case in “bipartisan” compromises, the Republicans got “snookered” by the socialist/democrats.

The congressional ban on drilling is important to the socialist/democrats, not so much for environmental reasons as for power and economic ones. Keeping the ban in place and restricting domestic oil production keeps the oil supply tight and helps maintain the high energy and food prices necessary to convince the American public to allow more control over the economy by government.

If Congress does nothing, the ban expires at the end of this fiscal year, September 30. In the current political climate the socialist/democrats hope to avoid a floor fight in attempting to renew it. The New Energy Reform Act offered by the “gang” would still keep most of the ban in place while at the same time giving the socialist/democrats many of the things they want but would have a difficult time getting through Congress otherwise.

While expanding drilling in the Gulf of Mexico off Florida’s northwestern coast, the new scaled down version of the ban would still forbid any new drilling off the west coast, ANWR and the east coast north of Virginia. The states whose coasts would be affected by the revised ban, North Carolina, South Carolina, Georgia, Virginia and Florida would still have the final say in allowing drilling off their shores. Florida however would have no say about drilling in the Gulf. After all, “states rights” only go so far.

As Senator Saxby Chambliss (R-GA) explained it, “It’s only a logical extension of what’s happening in the Gulf right now. Plus, that area has been identified as an area where resources are available right now.”

Senator Chambliss’ statement brings up a more important question: How far offshore does state sovereignty extend? Territorial waters extend twelve miles from the coast line. By treaty they go out another twelve nautical miles as a contiguous zone. The Exclusive Economic Zone includes territorial waters and contiguous waters, plus an additional 176 nautical miles for a total of two hundred, also by treaty. This treaty was intended primarily for protecting marine resources, i.e. fishing rights, etc.

States are forbidden by the Constitution from participating in international treaties. Waters in the Exclusive Economic Zone beyond the twelve mile territorial limit are technically under the jurisdiction of the federal government. It is interesting that in the case of drilling Congress is so sensitive to “states rights” while at all other times the Tenth Amendment seems hardly to exist at all. If states rights exist for off shore drilling elsewhere, why does it not in the Gulf? I do not remember Congress considering states rights when they implemented the ban in the first place, so, why are they so concerned about the states wishes when they repeal it?

It is not difficult to understand Obama’s seeming “flip-flop” when you look at all the “fringe benefits” given to the socialist/democrats in the Gang of 10 plan. They get to extend the ban on drilling without a floor vote on renewing the old one; they get to gouge big oil for even more tax money; they get to extend their control over the automotive industry; and they get to increase their control over energy production and use.

As things now stand the government only gets a forty seven percent tax bite out of oil company revenues, according to Exxon’s second quarter earnings report. That’s because of all those special tax breaks the Democrats are so fond of talking about. “Sharecroppers” during the depression got a better deal from their landlords than the oil companies get from the government. Under the sharecropper arrangement the landlord furnished the equipment, provided the seeds, supplied the land etc. The sharecropper did all the work and at harvest time the landlord took half the profits and the remaining half went to the sharecropper.

Under the government’s sharecropper plan for oil, the oil company finds the oil, supplies all the equipment and labor necessary for getting it to market and takes all the market risks. The government does nothing except share in the profits. Again according to Exxon’s second quarter earnings statement, on $138 billion in sales, Exxon took away a little over $11 billion in profits while the landlord took $32 billion in taxes as his share. A profit/tax ratio of three to one in favor of the government.

According to Obama and the socialist/democrats a three to one differential between profit and taxes is not enough, they want to expand it even more.

The $84 billion New Energy Reform Act also has the ambitious goal of converting 85% of America’s new car fleet to non-petroleum based fuel within twenty years. That will require increasing government control over the auto manufacturers as well as the oil companies.

There is no way they can reach this goal without losing the billions in windfall taxes from the oil companies, even if they succeed in forcing the oil companies into a different type of energy business. Even by Washington bookkeeping standards it’s going to be a losing proposition for the taxpayers.

Air, biofuels, geothermal, wind and even nuclear energy is not going to be the cash cow for the government oil has been. In fact, the return on these energy sources is more likely to be in the negative column due to the “incentives” Congress is planning to use to encourage their development. Government is going to have to make up the shortfall with increased taxes or increased deficit spending. It may take a little longer, but Congress could reach the same results by simply letting the free market system do its job and avoid the burden on the taxpayers.

Hugo Chavez straightforwardly nationalized the oil industry in Venezuela. America is not yet ready for so drastic a step. Instead the socialist/democrats in Congress plan to accomplish the same thing through a combination of coercion and bribes. The bribes to be paid by the taxpayers, of course. America can count itself lucky if we come out of the oil crisis with out at least the de facto nationalization of both the energy and automotive industries coupled with an astronomical tax bill.

If the Gang of 10 really wanted to do what was in the best interest of the American people they would just let the congressional ban expire at the end of September as scheduled.

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4 responses to “The Gang That Couldn't Think Straight

  1. goodtimepolitics

    Another flip-flopp for Obama on the oil drilling just for political reasons. He would vote yes on anything just to win the election where it would hurt the country or not!

  2. This is an excellent analysis of The New Energy Reform Act. This plan if enacted would be far worse than the alternative: letting the congressional ban on drilling expire at the end of September as scheduled. On too many occasions Congressional Republicans have rhetorically said they favor “limited government” while simultaneously supporting “comprehensive” legislation. The problem with a “comprehensive” approach to legislation is that it allows a whole host of taxpayer funded initiatives to be passed in one vote under one bill; often many of these initiatives are not in the best interest of the country as a whole. Many of our representatives in Washington, whether Democrat or Republican, say that compromise and consensus is needed to pass legislation. My response to that is this: Compromise and consensus does not guarantee good legislation. In this case with the New Energy Reform Act, regrettably some good Republican Senators have been roped into supporting some bad legislation, which really goes against the principle of limited government. In addition as you have pointed out, this bill limits drilling and does more harm than good. I would urge Senator McCain to publicly oppose this well-intentioned but bad bill and for the Republican sponsors of this legislation to withdraw their support. In addition I would urge all Republicans in Congress and those up for election in November to unite on these principles:
    **We believe in limited government.
    **We oppose “Comprehensive” bills, as they contribute to out of control growth in government and the passage of bad legislation. Such bills also provide political cover for legislators, who can say that while not everything in the bill is not what they would support, it contains elements which are positive an benefit the country.
    **We believe one way to limit growth in government is to require new taxpayer funded initiatives to be passed as standalone bills; if a taxpayer funded initiative cannot pass as an individual bill, it should not be allowed to pass as part of a comprehensive bill.
    **Critics of passing one initiative at a time will say it is not practical or take too long. To those critics, we say it is better to take longer and pass good legislation than to pass through good and bad legislation quickly as part of a comprehensive bill.

    Take care and thank you for your attention.


    Pete Barbour
    Mesa, AZ

  3. When commenting on the Law of the Sea Treaty it is a good idea to read it carefully. If you do you will find that the exclusive economic zone does not include what you call territorial waters. The EEZ is an area beyond the territorial sea and the scope of jurisdiction therein is very different than in 12 mile the territorial sea. This was very carefully negotiated in the LOS conference.

  4. The U.S. Constitution, Article I, Section 8, Clause 3 says: “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”.

    The word “regulate” relates to some form of control or condition imposed upon a function or process. The word “prohibit” means to “To forbid by authority”, which effectively eliminates any “regulation” by making such function or process cease to exist. Thus “regulate” and “prohibit” cannot coexist; only one or the other, but not both at the same time are possible.

    Thus, Congress clearly has abused its sole authority as a regulator so as to outright prohibit the use of public land, then exacerbate the matter in a case when circumstances obviously dictate a public interest requirement to do otherwise.

    Attaching such prohibition to an appropriations bill is morally, ethically and logically wrong because it deprives the people of knowing how their Congressmen voted on that particular subject. In fact, town meetings in much of New England, by state law, absolutely prohibit such activities whereby different subjects must put to the legislative body by a separate vote.

    Why is following the Constitution and most importantly doing the right thing so elusive to Congress?

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