Congressman John Yarmuth is still looking in article 1 for this pesky law of supply and demand that everyone keeps talking about. That's sort of like forcing oil companies to drill in areas that we know don't contain oil -- another component of the Yarmuth energy plan.
Yarmuth attempted to respond to Anne Northup's attacks on his refusal to allow drilling in Alaska and off the Continental Shelf.
Note his salient economic analysis, as quoted in the Courier-Journal:
Yarmuth said the cost of gas has spiked not so much because of supply problems but because the Bush administration's economic policy has led to a sagging dollar and that its war in Iraq has destabilized the Middle East.
To be sure, the dollar's weakness has contributed to increased oil prices,but we have seen currency fluctuations before -- remember when foreigners purchased American landmarks, like Rockefeller Center in the late '80s. And yet gas did not jump to $4 a gallon. The dollar's weakness makes foreign gas more expensive. So let's reduce the amount of foreign gas we purchase by developing American resources.
More troubling is Yarmuth's assertion that gas prices have not increased "so much because of supply problems." It's axiomatic that when demand exceeds supply, prices increase. When suupply increases, prices drop.
Yarmuth surely knows this, which is why he then contradicts his argument by citing a supposed impediment to supply: the "war in Iraq has destabilized the Middle East."
To reach that conclusion, Yarmuth is forced to ignore the success of the surge. Stability in Iraq has begun to lure back foreign investment, even from those countries who couldn't be bothered fighting with the U.S. forces. Yarmuth's argument might have been plausible a year and a half ago, before the surge began. But at that point in time oil prices were not $4 a gallon.
In addition to ignoring the success of the surge, Yarmuth does not understand the dangers in the Middle East. The president of Iran's threats to wipe Israel off the map cannot be blamed on the Bush administration; it's just plain old anti-Semitism (the sort we see on Barack Obama's web site and the DailyKos.). Likewise for Hamas.
The Middle East will always be a volatile region. There will always be countries there that hate Israel and the U.S.. That's why it's in our national security interest to develop domestic sources of energy, specifically in Alaska and off our shores.
Yarmuth talks about revoking tax breaks for oil companies and using the money to develop alternative energy sources. Apparently he wants to put our government in the energy business rather than allowing those companies with the expertise to use American ingenuity to develop new products. It's all well and good to develop renewable energy, but the form it will take and the timing for its arrival are entirely speculative. And Americans need relief from gas prices now.
Northup understands that if we commit to drilling in Alaska and off our shores today, gas prices will immediately fall because the current price reflects the futures market for oil. If the markets includes the vast reserves in ANWR and on the Continental Shelf, gas prices immediately will drop --estimates range from fifty cents to a dollar a gallon.
Democrats pretend that they oppose drilling in Alaska because they want to save the polar bears. The only hides they want to protect are their own. They know that if gas prices drop, so do their prospects for victory.