Arghhhhh!

Congress should consider cutting multibillion-dollar subsidies to oil companies amid rising concern over skyrocketing gas prices, House of Representatives Speaker John Boehner said on Monday.


Is this not basic economics?  I mean, I'm a history major, I'm not exactly an expert in this and I simply cannot see the logic in a conclusion like this.  The worry is that gas prices are too high.  So, the conclusion is to make gas more expensive?  Really?  That's what we're going for here?  


Let me elucidate how this works in my brain.  Gas is expensive for numerous, numerous reasons, not the least of which are as follows:


1) tornado and storm damage to refineries, which are the link between oil drilling and the gas you put in your motor; the US already has a dearth of oil refineries, largely due to federal regulation limitations, which limit how much oil is produced even more than drilling regulations might
2) the war in Libya (oh, sorry, what are we calling it now?), during which the oilfields of the Libya are being set aflame
3) a stop on new oil drilling in the Gulf, as per our President's executive order


I could probably keep going, but that's the low-hanging fruit.  Now, oil companies in the US have huge upfront costs involved in locating and obtaining oil from sources.  Much like medical research, it can take years and cost millions to find successful wells.  The price of gas is reflected in the combination of all these factors: to cover overhead, to account for refining costs, to cover any shortages, etc.  Oil companies receive so-called "tax breaks" just like any other company, in order to balance out how these costs and prices interact  for the company and the consumer.  


Now, lifting "tax breaks" for oil companies is going to do at least two things.  It's going to force smaller companies that rely on tax breaks in order to break even during development years out of business.  The larger companies, the ones that get all the bad press like Exxon and Conoco can absorb the increased costs that are going to accompany the removal of "tax breaks".  But what that will do is increase their overhead costs.  And in order to compensate, those costs are going to come down the pipeline as increased price-per-barrel.  The companies are built to make a profit.  They are not charitable institutions.  If they don't make a profit, they go under and hundreds of thousands of more people are out of work.  Therefore, if they lose their present profit margin to an increased tax bill, they will shift costs elsewhere, a.k.a. to the consumer.  


So Boehner's big plan here is apparently to (1) force smaller businesses out of business, and (2) increase the price of gas at the pump.  I'm confused as to how exactly this is supposed to help the consumer. 


But of course, it obviously isn't meant to the help the consumer.  The system is built so that the blame gets placed on the corporation, not the government official who forced increased tax prices through stupid legislation.  It's all part of the "Narrative" that big bad oil companies are out to squeeze you for every bit you're worth, and the nice government man is HERE TO HELP.  


I'm so frustrated that Boehner is the one stepping in this.  I know I should have know better, but I still stupidly expected the GOP leadership to stay away from the same populist bullshit.  Will Collier offers this nice explanation of rising gas prices related to drilling rules, but we've got to be better than beating our heads against this same damn wall.