‘It’s time we did something about supply to go along with our previous efforts to affect demand. But as long as our friends on the other side refuse, we will get nowhere in this debate’



Washington, D.C.— U.S. Senate Republican Leader Mitch McConnell delivered the following remarks on the Senate floor Tuesday regarding the Democrat leadership’s plan to further increase gas prices by raising taxes, a proposal even the Democrat Energy Committee chairman doesn’t support:



“Over the weekend, average U.S. gas prices hit an all-time high of more than $4.00 a gallon. I only point this out because it seems our friends on the other side aren’t aware of it. In the middle of what some are calling the biggest energy shock in a generation, they seem baffled. Faced with a national outrage over gas prices, they propose as a solution, of all things, a Windfall Profits Tax.



“If the idea had any merit at all, Republicans would consider it. It doesn’t. We know it from experience. Jimmy Carter tried a Windfall Profits Tax in 1980, and it was a miserable failure. The Congressional Research Service says its only effect was to depress domestic production, thus significantly increasing our reliance on foreign oil. And in the end, less domestic production led to significantly less revenue from the tax than was expected. The same thing would happen this time.



“The biggest hit wouldn’t be to the energy companies. It would be the American consumer, who now dreads pulling his or her car into the gas station. Hitting the gas companies might make for good campaign literature or evening news clips, but it won’t address the problem. This bill isn’t a serious response to high gas prices. It’s a gimmick. And don’t just take my word for it. The Democrats themselves said as much when their leadership first proposed this sham solution last month.



“Americans have lost patience with Democrat inaction on gas prices. Americans understand supply and demand. They know the only way to drive prices down is to drive production up here at home and by reducing demand through the kind of sensible action we took last year on fuel efficiency and renewable fuels. With gas now at $4 dollars a gallon, recent polls show that an increasing number of Americans are calling on us to exercise the option of exploring for energy here at home.



“What’s the Democrat response to all this? Last week, the Majority proposed a Climate Change Tax that would have raised gas prices $1.40 a gallon higher than they already are. They’re hoping the idea of going after energy companies will create the illusion of action, after a week in which they themselves fought for a bill that would make the problem worse. This is a political charade.



“This bill is not a serious approach to lowering gas prices. Our friends proposed the same one last month. It went nowhere; they didn’t even bring it up because their own committee chairmen opposed it. The Democrat Chairman of the Energy and Natural Resources Committee, the Junior Senator from New Mexico, called the Windfall Profits Tax ‘arbitrary.’ The Senior Senator from New York, cautioned that another key provision of the bill would drive jobs overseas.



“If the Democrats themselves don’t like the bill and oppose its provisions, why are they reviving it?



“Democrats will claim that this bill would bring gas prices down. But in doing so they are counting on Americans to forget a basic law of economics: that raising taxes on those who produce something leads to an increase in the price of the products they sell. This was true in Adam Smith’s pin factory. It’s true for energy companies today. More taxes means higher prices.



“The rational response to high gas prices is to propose a policy that would actually lower them. And that’s what Republicans have done. Last month we proposed a bill that would allow us to access the 14 billion barrels of known recoverable oil on the Outer Continental Shelf in an environmentally sensitive manner. We’ve also tried to open up the Arctic National Wildlife Refuge for limited and safe exploration. We’ve been blocked by our friends on the other side at every turn.



“When Bill Clinton first vetoed the idea in 1995, the price at the pump was $1.06 a gallon. Gas costs nearly four times as much as it did then. How high does it have to go before our friends on the other side allow limited and environmentally sensitive exploration of these giant U.S. reserves?



“Evidently $4 a gallon isn’t high enough for them.



“We have a better plan for addressing gas prices, one that respects the laws of supply and demand. In addition to the two provisions I’ve already mentioned, our bill mandates that billions of gallons of coal-derived fuels be produced through clean coal technologies as a way of further reducing our dependence on foreign sources of oil.



“Our bill repeals the one-year moratorium on oil shale production in Colorado, Wyoming, and Utah. And it would accelerate the construction of refineries in the United States, as well as the development of advanced batteries for plug-in hybrid vehicles.



“Republicans are determined to lower gas prices the only way we can, and strengthening our energy security for the long-term: by increasing supply. We’ve tried to do so repeatedly. And every time we’ve tried, we’ve been blocked by our friends on the other side.



“Just last month, 48 Democrats blocked consideration of our energy supply bill. Last week, they blocked consideration of an amendment I sponsored that would have prevented the increase in gas prices that the Boxer Climate Tax Bill would have caused. And now, two days after we saw the highest recorded gas prices in history, they’re proposing an idea that’s already failed once, and which will do nothing to ease the pain that Americans are feeling at the pump.



“Our friends on the other side have no serious plan to address gas prices. They’ve demonstrated this in the past. They’re demonstrating it today.



“Yesterday’s Wall Street Journal highlighted the kind of situation that’s become typical over the past several months. In a story about high gas prices, the Journal quoted a self-employed handyman in Dallas who’s paying more than twice as much money to fill his tank than he did a few years ago. ‘I feel like I’m being held at knifepoint,’ he said. ‘If they charge $10 a gallon, I’m going to pay it.’



“It’s time we got serious about helping guys like this. It’s time we did something about supply to go along with our previous efforts to affect demand. But as long as our friends on the other side refuse, we will get nowhere in this debate. And that’s why gas prices have gone up more than $1.71 since Democrats took over.



“I will vote against proceeding to this irresponsible bill.



“I advise my colleagues to do the same.”



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