States Rights And Gas Prices

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Last week’s Presidential visit brought a lot of attention to the issue of energy and gas prices.

As you might expect, the issue of high gas prices has been one of the complaints received by my office. This was especially true during the 2007/2008 time period when prices approached four dollars per gallon. People are hard pressed to deal with these prices.

As most know, gas prices are influenced by many factors, including supply and demand, commodity market trading, federal monetary policy, inflation and federal energy policy. There is a little that can be done at the state level to affect gas prices. State government impacts gas prices through taxation and regulatory policy.

Oklahoma imposes a state tax on each gallon of gas. Fortunately, at seventeen cents per gallon, it is one of the lowest in the nation — with only South Carolina, New Jersey, Wyoming and Alaska having lower gas taxes. We should always hold the line and defeat any attempts to increase this tax.

I am also a big believer that state government should provide the most friendly regulatory environment to the energy industry. The industry drives a significant portion of the state’s economy, and increased production provides a role in driving down prices in the long term.

Much of the price of gas and energy activity is driven by policy at the federal level. Far too little attention is given to the fact that federal monetary policy has a huge effect on gas prices. When the federal government prints too much money, monetizes the nation’s debt, and engages in loose monetary policy, the long-term effect is massive inflation. The price of oil is denominated in dollars and this means that the cost of oil quickly appreciates as the dollar becomes less valuable.

I believe the recent increase in gas prices can be most directly linked to this mismanagement of federal monetary policy, and we will all pay the price as the cost of fuel inflation will be priced into many consumer goods such as groceries. Lots of people are seeing the increase in fuel prices and are becoming worried that they won’t be able to afford to fill up their cars. They are looking for things like online surveys that they can get rewards from to get cheaper fuel.

The federal government also plays an important role when it discourages or prevents the free market from providing solutions to the energy crises. No point better illustrates this point than the federal government’s rejection of the plan to build the Keystone pipeline to deliver oil from Canada, across Oklahoma and to the Gulf of Mexico. The federal government had the ability to deny this project because it crossed a national boundary. Fortunately, the federal government does not play as strong a role in approving or denying projects that do not cross national boundaries, and part of the project involving Oklahoma will still go forward.

Like many taxpayers, I hate it when petty politics get involved in these matters. For example, the current federal administration’s denial of the larger Keystone project occurred before the latest spike in gas prices. Now, as prices spike, the President visited Oklahoma in an attempt to take credit for the smaller project, even though the action of denying the initial project was so costly and the federal government’s role in approving the smaller project was not as significant. This is just politics and it makes many people very upset and frustrated.

This provides yet another example of the importance of states’ rights issues and the ability of local government to have the maximum influence over important policy matters. State government is far more representative of the beliefs and values of the people than the federal government can ever be.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email with your thoughts and suggestions.


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