What Congress Can Do
About Higher Gas Prices
July 31, 2006
prices are soaring and the American people are angry.
They want something done about itónow!
rebate checks to American motorists wonít cut it, nor will mandatory mileage
requirements for new vehicles.
Taxing oil profits will only force prices higher.
But there are some very important things we can do immediately to help.
We must reassess our foreign policy and announce some changes.
One of the reasons we went into Iraq was to secure oil.
Before the Iraq war oil was less than $30 per barrel; today it is over
sooner we get out of Iraq and allow the Iraqis to solve their own problems the
2002 oil production in Iraq has dropped 50%.
Pipeline sabotage and fires are routine; we have been unable to prevent
gasoline prices are a giant unintended consequence of our invasion, pure and
We must end our obsession for a military confrontation with Iran.
Iran does not have a nuclear weapon, and according to our own CIA is
nowhere near getting one.
Yet the drumbeat grows louder for attacking certain sites in Iran, either
by conventional or even nuclear means.
An attack on Iran, coupled with our continued presence in Iraq, could
hike gas prices to $5 or $6 per gallon here at home.
By contrast, a sensible approach toward Iran could quickly lower oil
prices by $20 per barrel.
We must remember that prices of all things go up because of inflation.
Inflation by definition is an increase in the money supply.
The money supply is controlled by the Federal Reserve Bank, and responds
to the deficits Congress creates.
When deficits are excessive, as they are today, the Fed creates new
dollars out of thin air to buy Treasury bills and keep interest rates
But when new money is created out of nothing, the money already in
circulation loses value.
Once this is recognized, prices rise-- some more rapidly than others.
Thatís what we see today with the cost of energy.
deficits, due to runaway entitlement spending and the cost of overseas
engagements, create pressure for the Fed to inflate the money supply.
This contributes greatly to the higher prices weíre all paying at the
we want to do something about gas prices, Congress should greatly reduce federal
spending, balance the budget, and eliminate regulations that interfere with the
market development of alternative fuels.
All subsidies and special benefits to energy companies should be ended.
And in the meantime letís eliminate federal gas taxes at the pump.