THE STUPIDITY OF $4 A GALLON

The average retail price of a gallon of gas in the U.S. this week is $3.61, according to the Energy Information Administration.  That's up 55 cents a gallon from this time last year.  Many analysts expect the price to approach $4 a gallon this summer.

Anticipating this, last month Sen. John McCain proposed suspending the 18.4 cent a gallon federal gasoline tax between Memorial Day and Labor Day.  Sen. Hillary Rodham Clinton has endorsed the idea.  Sen. Barack Hussein Obama has denounced it.

"We're arguing over a gimmick that would save you half a tank of gas over the entire summer," Sen. Obama said while campaigning in North Carolina.  "I think all of us realize this is solely pandering," agreed Republican senator Bob Corker of Tennessee.

Because the gas tax funds highway construction and repair, some media commentators implied the tax holiday could endanger motorists.

But more money could be saved in the highway trust fund than the $10-$12 billion a summer tax holiday would drain from it if all the money in the trust were devoted to building and repairing highways.  That's because about a quarter of the monies currently raised by the gas tax goes to fund pork barrel projects such as horse trails in Virginia and snowmobile trails in Minnesota.

Sen. Obama wasn't always hostile to such "gimmicks."  As an Illinois state senator, he voted three times temporarily to suspend that state's gasoline tax.  Gasoline prices then were about $2 a gallon.

The 5% Illinois state sales tax on gasoline was suspended, despite Mr. Obama's objection, in June of 2000 for the remainder of the year.  The suspension led to a price decline of three percent compared to neighboring states, according to a paper by the National Bureau of Economic Research.

A gas tax holiday won't do anything to increase energy supplies.  But it would provide hard pressed consumers with modest relief.  A Rasmussen poll indicates a plurality of Americans support it.

The near hysterical opposition to the gas tax holiday is instructive of the mindset of liberals.  It's perfectly okay to take more money from our pockets.  But for the government to tighten its belt? The horror.  The horror.

Crude oil prices exceeded $120 a barrel this week.  Last year at this time they were $66.75 a barrel.  Arjun Murti, who analyzes the oil industry for Goldman Sachs, thinks prices could reach $200 a barrel by the end of the year. Were that to happen, we might in the not too distant future look back with fond remembrance on $4 a gallon gasoline. 

And on prosperity, because an oil price increase of that magnitude could devastate our economy. Our current economic troubles are largely the product of the enormous sums we're sending overseas to buy foreign oil. 

It will take more than gimmicks to turn things around.  But all that Sen. Obama and Sen. Clinton have to offer is worse than a gimmick.  They want to impose an excess profits tax on American oil companies, even though they know perfectly well that the oil companies are not responsible for the price increase. 

How would diminishing the profits of oil companies increase the supply of oil, or lower its price?  It is a sign of the economic illiteracy of journalists that few are asking this question.

Rising world demand, chiefly in India and China, and the unwillingness of OPEC nations to pump more oil are responsible for much of the recent runup in prices.  The weak dollar contributes, too.  But the big culprit is our government.

The U.S. Geological Survey estimates there are 25-30 billion barrels of recoverable oil (about 90 percent as much as current U.S. proven reserves) in U.S. territory that Congress has placed off limits for drilling.  The most egregious example of this is the Arctic National Wildlife Refuge, a wasteland on the north coast of Alaska about the size of New England.  The area in which the oil companies wish to drill is smaller than the typical big city airport.  Yet there are an estimated 10.4 billion barrels of oil there.

If we were to tap our domestic resources, gasoline (and food) prices would fall, and our economy would soar, because we'd be spending the money in America instead of in Saudi Arabia.

"What keeps these areas closed are exaggerated environmental fears, strong prejudice against oil companies, and sheer stupidity," said Washington Post columnist Robert Samuelson.

Sheer stupidity is abundant in Washington, as the ethanol fiasco proves. But at $4 a gallon, sheer stupidity is too expensive. 

Jack Kelly is a former Marine and Green Beret and a former deputy assistant secretary of the Air Force in the Reagan administration. He is national security writer for the Pittsburgh Post-Gazette.