Gas gauges and price gouging.

ITEM: As gasoline prices rose, Democrats in Congress took aim at the oil companies, reported the Washington Post for May 11. "Standing in front of an Exxon station near the Capitol on Wednesday with the posted $3.05-a-gallon price for unleaded regular in the background, half a dozen senators railed against the oil industry. Sen. Charles E. Schumer (D-N.Y.) said Congress would look into breaking up the giant companies. Sen. Maria Cantwell (D-Wash.) promoted her anti-price-gouging bill, which the Senate Commerce Committee adopted on Tuesday. And Sen. Bernard Sanders (I-Vt.) backed a windfall profits tax, pointing to $440 billion in profits over the past six years for the nation 's five biggest oil companies. 'I think it's time to say to these people, "Stop ripping off the American people,"' Sanders said."

ITEM: Writing in the Miami Herald for May 10, columnist Andres Oppenheimer took note of the rising gasoline prices and predictions that they would increase even more and rejoiced. "I'm not kidding. I ant more convinced than ever that unless gasoline prices rise above $4 a gallon, there won't be a nationwide uproar strong enough to force Washington to get serious about reducing the U.S. suicidal dependence on foreign oil. Barring $4-a-gallon gasoline prices, America will not get serious about reducing toxic emissions that worsen global warming, and will continue to fund corrupt Middle Eastern kingdoms."

CORRECTION: When gasoline prices reached $3.00 a gallon last year, there was wailing and teeth-gnashing and frequent charges against energy suppliers, alleging collusion and price gouging. The same is happening now as prices have surged past the $3.00 mark--except now the complaints are punctuated with scattered rejoicing and predictions that a little more financial pain--say, $4.00 a gallon--would get us to do the right thing and cut oil consumption, undoubtedly through government taxes or controls. But both sides are relying on contrived cases.

It is understandable that consumers Who is getting rich? Economics professor Carol Dahl showed that the "return on investment" in gasoline refining in the United States between 1997 and 2005 averaged less than seven percent--much lower than most major industries. For the most part, the culprit behind high prices lies mainly in government regulation and taxation. would be taken back by soaring gasoline prices. But the reason prices are soaring does not have to do with greed. Yes, profits are made, but those profits are not extraordinarily high. Between 1977 and 2005, the rate of return on investment in gasoline refining in the United States averaged less than 7 percent, as reported by Carol Dahl, an economics professor at the Colorado School of Mines. This compares to returns over the same period of 9 percent in durable goods and more than 11.5 percent for the S&P 500 industrials.

Why then are prices rising? A major culprit is government regulation. Price increases are to be expected, points out Investor's Business Daily, when demand mounts at the same time that there are myriad boutique fuels mandated around the country, scads of environmental regulations placed on energy development, and broad resistance exerted against the building of refineries. Says IBD: "Our refineries are doing more than ever, but their numbers are dwindling and no new ones are being built. The reason is not greed, but cost and regulations. From 1994 to 2003, the refining industry spent $47.4 billion, not to build new refineries, but to bring existing ones into compliance with ever new and stringent environmental rules. That's where those allegedly excessive profits go."

The oil industry has also spent about $89 billion since 1993 on improving the environment, says the American Petroleum Institute, with many refineries being forced to close because they could not afford to meet more stringent government regulations. There were more than 300 refineries in 1980 in the United States, about twice the number of today, despite the growing demand.

In 2006, continued Investor's Business Daily, "the blending of ethanol into gasoline reached a new high of more than 5 billion gallons and production of new clean-burning ultra low-sulfur diesel fuel topped a record 2.6 million barrels a day at the end of last year. The fact is that U.S. refining capacity has been growing at about 1% a year for the past decade--the equivalent of adding a mid-size refinery every year. Since 1996, U.S. refiners have expanded capacity by more than 2 million barrels a day. This is a remarkable achievement in the face of environmental mandates setting new ethanol usage and low-sulfur requirements. But the last major refinery built in the U.S. was in Garyville, La., in 1976 and the ones we have are getting older, no matter how well they're maintained. Fifty out of 194 refineries were shut down from 1990 to 2004." Of course, more growth in refinery capacity could have held down prices by making more gasoline available; without increased refinery capacity, higher prices moderate demand, particularly during periods of peak usage.

The answer to the problem, according to those yelling "Price gouging?" is to tax oil companies and develop alternative energy solutions. Earlier this year, after a large corporate profit statement was released ExxonMobil, Sen. Hillary Clinton (D-N.Y.) spoke longingly: "I want to take those profits, and I want to put them into a strategic energy fund that will begin to fund alternative smart energy, alternatives and technologies that will begin to actually move us toward the direction of independence."

President Jimmy Carter worked to implement legislation to achieve the same goals. When the government started us on the purported road "toward" energy independence, the United States imported about 35 percent of its total oil consumption (1973 figures); last year, according to the U.S. Energy Information Administration, such imports had risen to at least 60 percent.

The latest energy panacea has been the ethanol elixir. But this has not reduced prices. As Jerry Taylor and Peter Van Doren noted in the Chicago-Sun-Times: "If you lived in California and other areas that used reformulated gasoline last summer--that's the environmentally 'clean' gasoline required for areas with air pollution problems, and that's where most of that ethanol went--you might have paid up to 60 cents a gallon more for gasoline than you would have otherwise." The writers, both senior fellows at Cato Institute, continued: "That's because the federal government required oil refineries to use 4 billion gallons of ethanol in 2006 regardless of price, and gasoline pump prices last summer reflected the fact that ethanol was twice as expensive as wholesale conventional gasoline."

Supply has been directly affected by other legislative roadblocks. Many of the same left-wing senators who are accusing the Bush administration of "inaction" have been among those stifling production in the United States. As noted by columnist Michael Johns: "An estimated 10 billion barrels remain undrilled on a small part of the Arctic National Wildlife Refuge (ANWR). And off of our own coastal waters, European and other nations drill for oil where our own Congress has prohibited such drilling by American oil companies." Grandstanding lawmakers keep pushing policies that would bump prices even higher. As noted by Myron Ebell, director of energy policy for the Competitive Enterprise Institute: "Greenhouse gas emissions caps, renewable energy mandates, biofuels subsidies and a number of other proposals would, if adopted, raise energy costs dramatically for American consumers."

Add those costs to the present government-inspired burdens and taxes. New York Senators Clinton and Schumer who, as noted above, wouldn't mind "breaking up" large energy firms, don't tell you that New Yorkers pay the highest gasoline tax in the country, at 60.8 cents per gallon, with the Empire State itself sucking down more than 42 cents of that. The American Petroleum Institute notes that the nationwide average tax on gasoline this spring was 45.8 cents per gallon. This compares to about 13 cents per gallon made by the oil companies. As columnist George Will has observed, 49 states out of 50 make more than the oil companies do on every gallon (Alaska being the exception).

Will government policies and the consequential high costs of fuel either cause policymakers to rethink policy or bring about environmental cleanliness? The British and Europeans on the continent are regularly paying $6.00 or $7.00 per gallon, yet their governments keep siphoning off even larger amounts than in this country.

Setting policies that make the United States more dependent on unpredictable foreign rulers does not bode well for the future. As it is, an estimated 77 percent of the world's proven oil reserves are in the hands of state-owned firms. Yet the answer is not to have American legislators making the business decisions in this country.