If you listen to the president and members of his party, rising gasoline prices benefit no one but fat cat oil executives and big companies that don’t care about their average consumer. Last week, the White House even unveiled a working group of federal agencies to probe potential fraud in the energy market. Barack Obama said that “speculators” might be to blame and promised to crack down on “price gouging” at the pump.
Who really benefits from soaring gas prices? The conservative Heritage Foundation’s Nicolas Loris argues that higher oil profits are good for all Americans. “When politicians attack big oil, it’s important to remember who owns these companies and where that money goes,” he writes.
Mutual funds and other firms hold almost 30 percent of oil stocks. Pension funds hold 27 percent; individual investors hold 23 percent; 14 percent is held in Individual Retirement Accounts; other institutional investments hold 5 percent; and corporate management holds 1.5 percent.
Loris quotes research by the American Petroleum Institute which found that in the states of Michigan, Missouri, Ohio and Pennsylvania, oil and natural gas stocks made up 3.1 to 5 percent of public pension holdings yet they accounted for up to 11.6 percent of the returns between 2005 and 2008.
The presidents says that there is no “silver bullet” to driving down gas prices and that’s true. But there is a number of things he can do.
First and foremost, the president could tell the Department of Interior to start issuing more permits for oil exploration and drilling in the Gulf of Mexico and other areas to boost domestic production. He could stop the Environmental Protection Agency from imposing costly regulations on refiners. He could get rid of special tax exemptions and subsidies for oil companies and at the same time lower all corporate rates to stir innovation and competition throughout the energy sector. He could stop pretending that renewable and “clean” energy alternative are the solution and let the oil market thrive.
Instead, the president is trying to convince Americans that big oil is to blame and that more government interventionism is necessary to save them from unscrupulous businessmen.