By: Brian Sikma
Gas prices have been hovering at higher than normal levels partly because our national refining capacity has not significantly expanded at any time during the past 30 years. Over the past several decades gasoline and petroleum companies have only expanded the capacity of existing refineries and have been unable to construct new facilities. This inability to build new refineries does not come from a lack of revenue on the part of the corporations, but instead comes from overly burdensome environmental regulations that either raise the price of construction to point where its not worth it or totally prevent that construction all together.
Some in Congress have proposed instituting price controls on gasoline sales. Price controls however would exacerbate the problem by further reducing the supply of fuel available at the pump. Others have proposed higher mpg fuel standards for vehicles. Mandating that newer vehicles be more fuel efficient will not help those of us that drive vehicles without the new technology. Additionally, consumers had better be willing to pay more for that new vehicle if Congress does succeed in passing fuel standards that require signification amounts of innovation and new technology.
So what’s the solution to energy problem? First, reduce our dependency on foreign oil by shedding short sighted environmental regulations that do not take into account the environmentally friendliness of new drilling technology. In other words, expand the supply here at home by taking advantage of large domestic oil reserves. Secondly, allow an increase in domestic refinery capacity by allowing companies to expand their refineries and, if necessary, build new ones. Finally, we need to allow private industry-and not government subsidies-to determine which alternative energy sources have enough potential to be used on a large scale.
Right now, British Petroleum is trying to expand its refining capacity at the BP Whiting refinery. Located in northwest Indiana, BP Whiting is strategically placed near Lake Michigan, not too far from Chicago. The expansion of the refinery would increase the amount of fuel available in one of the highest priced gasoline markets in the country.
BP initially announced its plan to invest $3.8 billion in the refinery some time ago. This investment in northwest Indiana was estimated to have the overall impact of $21 billion being added to the regional economy. This benefit does not include the impact that an increased fuel supply would give to people all over northern Indiana, southern Michigan, and northern Illinois.
In recent days however, the BP expansion project has come under intense fire from local activists and state and Congressional leaders. The ire of these individuals focuses on the fact that BP will be releasing more “waste” water into Lake Michigan if it increases refining capacity. Illinois governor Rod Blagojevich has urged Indiana governor Mitch Daniels to rescind the state issued permit that will allow BP to release the water (which is actually cleaner than some of the water that is pumped into the lake) back into the lake. So far Gov. Daniels (R) is holding the line on doing what’s right for not only the state but also the region.
The fact that Gov. Blagojevich (D) has felt qualified enough to comment on Indiana economic affairs is interesting since he was the target of a scorching Wall Street Journal editorial that criticised his very short sighted policy proposal to impose a business gross receipts tax on Illinois businesses.
Congressional critics of the plan include Illinois’ Sen. Dick Durbin (D) and Rep. Rahm Emanuel (D). Everyone of Indiana’s Democratic members of Congress have also expressed opposition to the plan. Criticizing the plan was apparently not enough for some members. On Wednesday, July 25th the U.S. House passed H. Con. Res. 187. The resolution condemned the State of Indiana and BP for moving ahead with plans to release more “pollutants” into Lake Michigan.
Indiana’s own congressional delegation was split on the measure. Every Indiana Democrat voted against increasing oil refining capacity and every Hoosier Republican voted to support the economic growth of Indiana and the environmentally sound expansion of refining capacity. The argument used by Democrats in supporting the condemnation resolution was that BP and Indiana were allowing the wholesale pollution of Lake Michigan. The scene painted by them was one of a big oil company collaborating with a pliable state government to create a situation that benefited BP and campaign coffers while reducing the standard of living of individuals who live near Lake Michigan.
While the rhetoric ran high about pollution, there was almost no attempt by Democrats to put the situation it its proper light. Congressman Mark Souder (R-IN) summed the affair up well when he said “BP is investing more than $3 billion in our state, and Democrats are targeting it, ostensibly, for environmental reasons, despite the fact that the plant will still fall within the federal pollution guidelines.” Souder also referred to the resolution (which, by the way, doesn’t have any legal binding to it) as a “sham.” Even though Congressman Souder’s district doesn’t border on Lake Michigan, he rightfully understands that amidst all the talk of pollution and the need for clean water, the increase in release materials will still be well within federal guidelines. In fact, the release levels are also within the bounds laid out by Indiana state guidelines, and these state guidelines are more restrictive than the federal regulations.
At the end of the day the question each member of Congress is going to have to ask him or herself is, “Did my vote help reduce our dependency on foreign oil and reduce gas prices, or did my vote promote a feel-good set of talking points with no basis in fact?” Rep. Souder (R-IN), Rep. Pence (R-IN), Rep. Burton (R-IN), and Rep. Buyer (R-IN) all voted to reduce gas prices and allow individuals to conduct there affairs without big government condemning their efforts. Rep. Visclosky (D-IN) voted, as he normally does, to condemn private enterprise and promote baseless charges. Rep. Donnelly (D-IN), Rep. Ellsworth (D-IN), and Rep. Hill (D-IN) were all elected in 2006 amidst a political atmosphere that found fault with Republicans for not doing enough to lower gas prices. If these three are seriously seeking reelection in 2008, they didn’t help their chances when they voted for a resolution that condemns a private enterprises attempt to provide more fuel, and lower fuel costs, to Hoosiers.